revitalisation of a historic building through performance … · 2018-04-14 · executive...

Dr Pieter le Roux, Senior Lecturer, Department of Architecture, University ofthe Free State, South Africa, Tel: 051 4013064, Email:<[email protected]>

Wilandi Esterhuysen, Junior lecturer (units), Department of Architecture,University of the Free State, South Africa, M.Arch candidate.

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Pieter le Roux & Wilandi Esterhuysen

Revitalisation of a historic building throughperformance evaluative research intoworkplace environmental conditionsPeer reviewed

AbstractFollowing the centennial celebrations of the University of the Free State in 2004,the need was identified to initiate a program according to which the image andfuture development of the university as a whole could be assessed. This includedoptimising the use of existing physical resources and prioritising on proposed newdevelopment. As part of this program, the historic Main Building was identified forrevitalisation through an adaptive reuse program into office space for theexecutive management of the university. Completed in July 2005, therefurbished facility now provides an updated approach to the concept ofworkplace by providing a mix of private and open plan offices.In an attempt to introduce the concept of performance evaluative research inworkplace environments to students of architecture at the University of the FreeState, the revitalised Main Building workplace environment was regarded as asuitable example. Performance evaluative research in workplace environmentsis a form of evidence-based research which aims to assess the functionality andserviceability levels of a specific facility on the basis of its ability to support andfacilitate diverse work styles, as well as the user-needs and -requirementsassociated with it. The evaluation process was conducted according to theprinciples of an Investigative-level Post-Occupancy Evaluation (POE) study, andaimed to assess the impact of stimuli from the workplace environment on theability of users to optimally perform and accomplish work-related tasks. The methodology according to which information for this POE study wascollected consisted of various surveys. This included an activity survey, anactivity duration survey, a communication survey, and a movement survey.The POE study lasted one working day, with the various mapping surveysundertaken simultaneously in 15-minute periods with 5-minute rest andpreparation intervals between them. Data collected in this manner thusprovides a comprehensive view of all aspects pertaining to work performanceand accomplishment in the specific office environment. The survey alsoincluded questionnaires distributed to all occupants of the workplace with areturn rate of 86%.

Navorsingsartikels • Research articles

Conclusions drawn from results of this study have indicated the response ofusers to the new workplace environment in terms of their perception of theimpact of the overall work environment on their ability to concentrate andperform work-related tasks. In this regard problems related to limited orinconvenient access to office resources and problems related to poor thermalcomfort (specifically with regards to the penetration of direct sunlight andlack of control over air-conditioning) occurred with a similar frequency (N = 48;f = 0.15). Results of this study will:• serve as feedback for the continued alignment of the University’s

physical resources with its dynamic resource management strategy —; and

• contribute to a database on work performance characteristics inSouth Africa.

Keywords: Building Performance Evaluation (BPE), Post-Occupancy Evaluation(POE), Facility Management (FM), revitalisation, functionality, serviceability

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Acta Structilia 2007: 14(1)

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Le Roux & Esterhuysen • Revitalisation of a historic building throughperformance evaluative research

1. Introduction

Research findings presented in this article are indicative of theworkplace environmental quality in the newly refurbished officespace in the historic Main Building on the campus of the

University of the Free Sate (UFS) for members of its ExecutiveManagement. The Main Building (Figure 1) is the oldest building oncampus (built circa 1907) and is situated in the geographic centre ofthe campus (Figure 2).

Figure 1: The historic Main Building on the campus of the University of the Free StateSource: (photo by author)

Figure 2: Layout of the core area on campus indicating the locations of the MainBuilding and the George du Toit Administration Building Source: (graphics by author).

Figure 3: Ground and first floor plans of the Main Building prior to thecommencement of refurbishment Source: (graphics by author).

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The decision to relocate members of the Executive Managementfrom the current George du Toit Administration Building to the MainBuilding aimed to bring together considerations regarding theadaptive reuse of existing physical resources on campus — a topicwhich was previously discussed at length by the author at the 2005SAFMA (South African Facilities Management Conference) under thetitle Towards the improvement and optimisation of facilities on thecampus of the University of the Free State (SAFMA, 2005).

Although matters pertaining to the Facilities Management (FM)policy of the UFS fall outside the parameters of this article, it must beemphasised that the revitalisation of the Main Building into executiveoffice space form part of a wider strategy of overall resourceoptimisation. The process of transformation through adaptive reusefrom class rooms to executive office space as illustrated in Figures 3 to5 are by no means an isolated effort. It forms part of an all-encompassing strategy which deals with campus FM on variouslevels — ranging from administration and lecture facilities topedestrian circulation routes and overall traffic management.

Figure 4: Refurbished ground floor plan of the Main Building. The shaded areasindicate the open plan work office area which was the focus of this study Source: (graphics by author).

Figure 5: Refurbished first floor plan of the Main Building. The shaded areas indicatethe open plan work office area which was the focus of this study Source: (graphics by author)

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2. Research objectivesAs was stated in Le Roux & Kato (2004) employee satisfaction in theworkplace environment can be interpreted from the perspective ofMarans & Spreckelmayer (1982 cited Boubekeri et al., 1991) whoidentify 4 factors to impact on the level of employee satisfaction.These factors are:

• the specific organisational context;

• job type and the characteristics of individual employees;

• the nature of the workplace environmental attributes(spatial quality, colour, light, air quality, etc.);

• the quality of the overall work environment as per theindividual employee’s qualitative assessment thereof.

Given the executive nature of the specific environment in which thisstudy was undertaken, two of the aforementioned factors arereflected in the primary objectives of this study. These are to determine:

• the level of overall environmental satisfaction with the newworkplace layout as perceived by employees; and

• patterns of use and adaptation to the new open plan officeenvironment.

A secondary objective of the study was to introduce students ofarchitecture to the concept of Building Performance Evaluation(BPE) through Post-Occupancy Evaluation (POE) (Le Roux, 2006).Since these concepts are usually not intrinsic to the teaching ofarchitectural design, the study was further aimed at providing anopportunity of illustrating the potential benefits of the awareness ofthese concepts during the conceptualisation of new designproposals in the design studio.

Although the collection of data and its contribution to workplaceenvironmental conditions in the South African context remain theprimary goal of this study, this initial exposure to concepts of BPE isindicative of how studies related to the reciprocal relationshipsbetween people and the built environment — generally referred toas person-environment studies — can be adopted into the teachingcurricula of architectural design and other related subjects.

3. Research methodologyThe research methodology for the BPE study of the refurbished MainBuilding workplace environment was structured according to thevarious stages of building performance evaluation through POE asper Preiser et al. (1988). Accordingly, stage one — Indicative-levelPOE — was used to undertake a walkthrough of the office environ-ment. This step ensures members of the research team have theopportunity to familiarise themselves with the specific environment,determine the accuracy of layout drawings received prior to thewalkthrough, and identify possible problem areas that should receivespecial attention during the actual survey (stage 2).

Following the Indicative-level POE, a more in-depth survey wasundertaken to determine aspects of workplace environmentalquality. This stage is referred to as an Investigative-level POE and

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consists of various approaches aimed at obtaining informationregarding aspects of workplace environmental quality such asworkplace and workspace layout, workspace spaciousness,movement, filing, storage, and support facilities. During the one-daysurvey of the open plan office, data was collected with regards tothe range of activities performed by employees, the duration of thevarious activities, and the extent and location of work-relatedmovement and communication. This specific research methodologyis consistent with that developed and discussed by the author andcollaborative researchers in Kato et al. (2005).

In addition to the various mapping surveys, a questionnaire surveywas distributed to all employees as a means of comparing perceivedand actual or observed work performance characteristics. Thequestionnaire aimed to elicit employee-perceptions related to:• their level of job satisfaction;• the nature and extent or duration of their activities in the

office;• the extent and location of work-related movement and

communication; and• the overall level of satisfaction with the environmental

quality of the new open plan office layout.

Questionnaires were distributed to all employees present in theoffice. With the consideration of employees who were not in theoffice during the survey, a return rate of 86.05% was achieved (37 outof 43 questionnaires distributed).

Observations made during the initial Investigative-level POE resultedin the formulation of various hypotheses regarding the impact of thenew open plan workplace environment on the work performance ofemployee. It was hypothesised that there would be:

• a greater sense of satisfaction among employees who valuethe performance enhancing aspects of the new officeenvironment;

• a higher level of cross-functional and cross-departmentalawareness, communication, and collaboration;

• increased movement between the various departments tofacilitate the increased levels of cross-functional and cross-departmental activities; and

• more opportunities for employees to express and actaccording to individual work styles.

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Overall number of individualworkspace settings in the

open plan layout:

Total number of enclosedoffices assigned to

individual employees:

Total number of occupiedworkspace settings

25 18 43

4. Sample characterisationThe surveyed workplace environment is located on the basement,ground, and first floors of the historic Main Building. The buildingserved as lecturing facilities prior to it being identified as suitable forrefurbishment into executive office space (Figure 3). The newworkplace environment accommodates a total of 43 employees(Table 1) who belong to 12 different departments as detailed in Table2. From a total of 47 workspace settings (of which 4 is vacant) theworkspace utilisation ratio — the relationship between the number ofworkspace settings provided and the number of employeesaccommodated — for the overall office was 91.50%. Individualworkspaces are provided in both open plan and enclosed layouts.From a total of 47 workspace settings, 19 (40.4%) are enclosed offices,23 (48.9%) are open plan offices, and the remaining 5 (11.1%) settingsare located in the basement work area as part of Department M:Meeting Administration and Language Services (Table 2).

Since only the ground and first floor layouts provided a layoutdiversity of both enclosed and open plan workspace settings, thebasement layout was not included in the initial mapping survey.Overall, these ground and first floors allow for a total of 1,390.50 m2useable office space. Of this area, 47.06% of the floor area (654.33m2) is dedicated to 11 departments, 30.93% (430.04 m2) to primarycirculation space, and 20.01% (280.65 m2) to meeting and supportspaces (kitchens, copy rooms, etc.) as illustrated in Table 3.3. Theaverage depth of floor (when measured from the inside of theperimeter wall to the centre of the primary circulation route) for thelargest part of the office was measured at approximately 7,730 mm.Accordingly, the interior spatial quality of the building is categorisedas a shallow-depth space, and illustrates the ability of the building toafford all employees direct visual access to the outside.

Table 1: Accommodation of staff compliment in open plan andenclosed offices

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Interior finishes, as well as furniture in both the enclosed and openplan offices are of a high standard and reflect the executive status ofthe work environment. Opaque glazing and doors with woodenframes were used together with partitions to separate the enclosedworkspaces from those in the open plan office area. Although thearchitect had originally intended to allow for visual contact betweenemployees in enclosed and open plan offices by means oftransparent glazing — and thereby contribute to the improvement ofthe level of cross-functional awareness and transparency —employees strongly opposed this idea due to their perception that itwould contribute to their lack of privacy. Subsequently, the differentworkspaces in the work environment are less integrated than whatwould have been the affect had transparent glazing been used (seeFigure 6c). As a result of this, employees are perhaps less aware of thefunctional nature diverse work styles and job descriptions in theworkplace environment.

In terms of workspace spaciousness, the average individual workspacesurface in the open plan office area measured 2.15 m2 per setting (seeTable 3b). Measurement of workspace spaciousness is a useful factorto relate possible complaints regarding too little workspace to, and assuch forms part of the survey of the existing environment.

Lighting conditions in the workplace also received attention in termsof energy efficiency and aesthetic appearance. The selected lightfittings as illustrated in Figure 6b allow for a sufficient level of light onwork surfaces (according to employees’ responses to relatedquestions in the questionnaire). Together with natural light fromwindows and the relatively shallow depth of the space the overalllighting environment was deemed satisfactory as no specificcomplaints were received to the contrary.

Although employees in the basement offices were included in thequestionnaire survey, the actual mappings were limited to the officeareas on the ground and first floors (compare with Fig. 7 for thelocation of each department within the new office environment).

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a). Primary circulation route b). General open plan office

c). Glass partitions separating enclosedand open plan offices

d). Average individual workspace in theopen plan office

Table 2: Departmental classification and the respective staffcompliment

Figure 6: Photographic survey of the interior Source: (photos by author)

Department No. of settingsprovided

Ground floor:A: Office of the Vice-Rector (Student Affairs):B: Office of the Registrar (General Affairs):C: Office for Diversity:D: Office of the Director (Physical Resources & Special Projects):E: Office of the Chief Director (Operations):F: Office of the Rector:

23 (1 vacant)2 (1 vacant)323

First floor:G: Community Service:H: Strategic Communication:J: Planning Unit:K: Office of the Vice-Rector (Academic Planning):L: Office of the Vice-Rector (Academic Operations):

48 (1 vacant)1122

Basement:M: Meeting Administration & Language Services:

5 (1 vacant)

Total: 47(4 vacant)

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Table 3: Dimensions of individual workspace settings

a). Individual workspaces in enclosedoffices (3.13 m2)

b). Individual workspaces in the open planarea (2.15 m2)

5. Research resultsResults of the research activities in the Main Building workplaceenvironment were obtained through various mapping procedures aspreviously discussed. The data as discussed here serve as anindication of the workplace environmental quality within six monthsof occupation of the new workplace environment.

5.1 Questionnaire analysisAs was discussed by Kato et al. (2005: 149-159) the mappingprocedures depend primarily on observations by the research teamregarding the workplace environment and the work performancebehaviour of employees. Since these observations are entirely basedon what members of the research team observe themselves, there isa concern regarding the objectivity with which data is recorded. Inorder to address this specific concern, a questionnaire survey formspart of the data collecting process. Questionnaires are distributed toall employees in the office and provide an opportunity to employeesto give feedback pertaining their perceptions of workplaceenvironmental quality, facility functionality (diversity in terms of user-requirements), and facility serviceability (the extent to which thefacility accommodates diverse user-requirements).

The responses employees gave to the questionnaire provided anindication of their level of satisfaction with the new workplace layoutand the resulting environmental conditions. All responses receivedwere subjected to a screening process during which their validity

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were assessed and where necessary, disqualified for not bearingdirectly on matters related to the workplace environmental quality.From a total of 73 responses 6 (8.22%) were disqualified due torespondents following incorrect or inappropriate procedures inanswering the questionnaire. Following the screening process, a totalof 67 (91.78%) comments pertaining to perceived performanceinhibiting aspects of the workplace environment were identified andcategorised as per Table 4. Accordingly, the most frequentlyperceived performance inhibiting categories were:

• problems related to insufficient storage and filing space (n= 13; f = 0.19);

• distractions due to background noise (n = 8; f = 0.12), aswell as problems related to poor thermal comfort (n = 8; f =0.12); and

• problems related to inconvenient / poor space planning(n = 7; f = 0.10).

Negative perceptions pertaining to insufficient storage and filingspace, inconvenient / poor space planning, and glare on worksurfaces due to the penetration of direct sunlight matched theproblem areas initially hypothesised.

Table 4: Frequency distribution of perceived performanceinhibiting workplace environmental variables (n = 67).

Workplace environmental variables n f

1.

Problems related to insufficient storage and filing space:• insufficient storage space• archive too small• no storage space in meeting rooms• no storage space for confidential documents

13 0.19

2.

Distractions due to background noise:• wooden floor is noisy• noise from telephones in open plan office• conversations from colleagues• the workplace environment is noisy

8 0.12

Problems related to poor thermal comfort:• ineffective air conditioning• no personal control over air conditioning• no windows

8 0.12

3.

Problems related to inconvenient/poor space planning:• bathroom in basement too small• enclosed office too small• paraplegic toilets not private• visitor’s area not practical• computer CPU not easily accessible• no bookshelves

7 0.10

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Workplace environmental variables n f

4.

Problems related to excessive workplace / workspacespaciousness:• personal desk too large• too much open spaces• too many visitor spaces are not being used

5 0.07

Problems related to office furniture (general):• office furniture very impersonal• not enough drawers• small mobile cupboard under desk is ineffective / impractical• no provision for stationary storage at desk

5 0.07

5.

Problems related to insufficient workplace/ workspacespaciousness:• desk space too small for filing / sorting work• not enough storage space for files at desk / personal items

4 0.06

Problems related to the open plan layout:• no privacy for personal calls and/or conversations• have to share office space• no partitions• emphasise status barriers

4 0.06

6.

Problems related to insufficient meeting space/ seating inmeeting spaces:• not enough seating in meeting room• insufficient meeting spaces

3 0.04

Problems related to OA (Office Automation) equipment:• wrong type of printer (too slow)• copier located too far from workspace• copier on other floor

3 0.04

7.

Discomfort due to sunlight and glare:• sunlight penetration a problem in summer 1 0.01

Problems resulting from the absence of notice boards:• no ‘pin-up’ boards 1 0.01

Problems related to movement / circulation:• wooden floor ‘bounces’ under movement and causescomputers to move

1 0.01

Problems related to staff rooms/additional support spaces:• staff room not private due to people walking through it 1 0.01

Problems related to insufficient width of space:• toilet facilities too small 1 0.01

Problems related to management of the overall workplaceenvironment:• very little opportunity for personalisation

1 0.01

Problems related to security:• poor locks on doors, cabinets, and desks 1 0.01

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5.2 Activity and activity duration mappingThe objective of the activity mapping is to determine firstly, the rangeof activities that form part of employees’ daily workplace activities,and secondly, the duration or time spent on the various activities.Workplace activities consist of two main categories — these being:

• work performed at individual workspace while in theoffice; and

• work performed away from individual workspace while inthe office.

The subcategories which represent the diversity of activitiesperformed in the workplace are indicated in Table 5. Classification ofemployees’ workplace activities in this manner enables the interpret-ation of both the frequency with which the various activities areperformed, as well as the various locations where these activities areperformed. As such, a clear indication of the extent to which in-dividual workspaces are appropriated is obtained. By using thisinformation it is possible to formulate individual employee profilespertaining to the extent and location of workspace utilisation. A com-bination of these individual profiles further allows the formulation ofdepartmental profiles that enable an improved overall under-standing of departmental characteristics and the related spatialrequirements. Ultimately, this approach allows for improved depart-mental and organisational space budgeting. Aspects of workspaceutilisation were also addressed by Becker (1990) with specificreference to the provision of territorial (fixed-address) and non-territorial (free-address) workspace settings and staffing typologies.Accordingly, fixed address workspace is classified as workspacewhich is occupied for more than 60% of the day, while free-addressworkspace is classified as workspace that is occupied for less than60% of a day. The implications of these indicators on space planningstrategies in open plan office layouts have been discussed at lengthby Le Roux (2005).

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Table 5: Range of activities performed at and away fromindividual workspace while in the office

Activities performed at individualworkspace

Activities performed away from individualworkspace

Cw: Computer work Mf: Formal meeting

D: Desk work Mi (away) Informal meeting / conversation

Tel.: Telephone F (away) Filing

Mi (at): Informal meeting /conversation F/C/P: Fax / Copy / Print

F (at): Filing M Movement

F/C/P: Fax / Copy / Print O Other

Although the body of evidence related to these implications is tooextensive to be included in this article it can be summarised bymeans of the conclusion which states that employees who spendmore than 60% of a day in the office should be accommodatedthrough fixed-address workspace solutions. These employees arereferred to as ‘sitters’ (Le Roux et al., 2001) and represent thetraditional function of the office to provide individual workspace toemployees. However, where employees spend less than 60% of aday in the office alternative workspace solutions such as free-addressworkspace might be more appropriate. This group of employees isreferred to as either ‘walkers’ or ‘runners’ and represent a new typeof work style where employees exhibit higher levels of mobility inperforming and accomplishing their workplace activities (Le Roux etal., 2001). Data from the activity mapping is therefore highly relevantto determining and adequately providing for work style diversityamong employees.

Data presented in Diagram 1 clearly illustrate the various activities onwhich employees in the different departments spent most of their time.The activity in which most departments — with the exception ofDepartment K (Office of the Vice-Rector: Academic Planning) —scored high levels of performance, was computer work (Cw) atindividual workspace. Performance of this activity ranged between alow of 26.7% (an average of 4 minutes per 15-minute interval) and ahigh of 51.5% (an average of 7.72 minutes per 15-minute interval). Alldepartments appear to spend very little time (below 20%; an averageof 3 minutes per 15-minute interval) doing desk work. Two importantfindings relate to the relatively high frequency of telephone use at

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individual workspaces (an average of 1.86 minutes per 15-minuteinterval) and the relatively high occurrence of filing (F) away fromindividual workspaces. This last observation corresponds with responsestabled as perceived performance inhibitors (Table 4). Although therelatively high occurrence of informal communication at and awayfrom individual workspaces appear to be the result of increased cross-functional awareness and contact between various departments inan open plan office layout, data from the communication mapping insection 4.3 illustrates that such communication was primarily betweenemployees of the same department. Movement in the office (M), aswell as other activities (O) were similarly of a relatively high nature.However, based on the results of the questionnaire survey, these werenot perceived by employees as performance inhibiting.

Findings presented in Diagram 2 illustrates that the departmentalaverages for time spent at individual workspaces by employees inthe open plan area for 4 departments were below 60%. This impliesthat individual or fixed-address workspaces were not used optimally.These departments are Department B (Office of the Registrar:General Affairs), Department F (Office of the Rector), Department J

Diagram 1: Activity profile for all departments (see Figure 7 for Departmental classification)

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(Planning), and Department K (Office of the Vice-Rector: AcademicPlanning). Since no employees belonging to Departments C (Officefor Diversity) and D (Office of the Director: Physical Resources &Special Projects) were present in the open plan office during thesurvey, no data were entered into the comparisons illustrated inDiagrams 1 and 2.

Diagram 2: Time spent at workspaces (Note the office average)

Bringing together data pertaining to time spent in the office and timespent at individual workspace as illustrated in Diagram 3 enablesevidence-based decision-making pertaining to the allocation ofworkspace based on employees’ performance behaviour and theirwork style diversity. The matrix illustrated in Diagram 3 contains 4quadrants structured around previously mentioned research findingsby Becker (1990) pertaining to workspace utilisation above andbelow the 60% mark (refer section 4.2). As will be discussed in thefollowing paragraph, interpretations of this matrix serve as a decision-making tool for issues related to workspace allocation strategies. Inorder to fully comprehend the interpretation of this matrix, a shortdiscussion thereof is deemed necessary.

The first quadrant refers to the hatched area where time in the officeand time at individual workspace are both below 60%. This group ofemployees is identified as ‘walkers’ or ‘runners’. Due to theirincreased level of mobility in work performance, this group is mostlikely to benefit from a free-address workspace solution. Employeesspending the majority of a day at their individual workspaces in the

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office are classified as ‘sitters’ and belong to quadrant three wheretime in the office and time at individual workspace are above 60%.These employees are best accommodated through a fixed-addressworkspace solution. Quadrant 2 refers to employees who spend lessthan 60% of a day in the office, but with individual workspaceutilisation above 60%. These employees are usually those performingwork requiring high levels of concentration. The last quadrant —quadrant 4 — includes employees who spend more than 60% of aday in the office, but less than 60% at individual workspace. Thisgroup of employees is characterised through increased levels ofmobility in their work performance and accomplishment within theworkplace environment. Based on the information provided inDiagram 3, the majority of employees in the Main Building officeenvironment belong to quadrants 3 and 4. This implies that em-ployees in this specific workplace environment display a tendency tobe in the office for the larger part of the day — thereby justifying thecurrent fixed-address workspace solution.

5.3 Movement and communication mappingData regarding employees’ movement and communication behaviourin the open plan office environment provide further insight into theextent of performance and work style diversity in the office. Movement-related data was collected simultaneous to the activity mapping, and is

Diagram 3: Illustration of work styles according to time spent in the office and time spent at individual workspace

used to illustrate where employees circulate in the course of workperformance, as well as their preferences in terms of the location ofcommunication and collaboration in the office. Movement lines forindividual employees are constructed using the data collected duringthe 15-minute intervals. By combining these movement lines, it is possibleto illustrate individual and departmental movement behaviour. Com-bined movement patterns illustrated in Figure 8 shows the overallmovement for the ground and first floor respectively. An importantobservation in this regard is that when comparing the overall depart-mental movement lines as indicated in Figure 8 with that of thedepartmental boundaries illustrated in Figure 7, it is found thatmovement for all departments are mostly limited to:

• movement within the same department;

• between the department and the various support facilities(kitchens, copy rooms, and toilet facilities); and

• shared entrance/exit areas.The high frequency of movement along the primary circulation route onthe first floor also corresponds with negative feedback from respondentsto the questionnaire. Accordingly, most complaints were related to thenoise of people moving on the wooden floors, as well disturbances dueto movement of the wooden floor when people walk on it. The latter wasparticularly disturbing in instances where the floor movement resulted incomputer monitors moving on desk surfaces.

Communication patterns as illustrated in Figure 9 appear to be mostlythe result of the observed movement patterns. In a similar fashion,communication was found to be primarily between employees of thesame departments — a situation which emphasises the fact that thereis less than expected cross-functional and cross-departmental com-munication and awareness. This situation is contrary to what was initiallyhypothesised.The communication behaviour observed in the departmental zonesillustrated in Figure 9 is also reflected in the respective communi-cation wheels for the observed ground and first floor communicationas presented in Figure 10. The communication wheel — as discussedby Kato et al. (2005) — is a circular diagram that contains referenceto all employees in the surveyed workplace environment. Employeesare grouped in a departmental manner to ease illustration of theextent and frequency of communication between different employ-ees and departments. Based on interpretations of the communi-cation wheel for the first floor, frequent communication occurred

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Figure 7-2: Ground floor plan illustrating overall departmental layout and proximities,as well as the location of the primary circulation area

Figure 7-1: Ground floor plan illustrating overall departmental layout and proximities,as well as the location of the primary circulation area

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Figure 8: Overall results of the movement showing the extent of departmentalmovement on the ground (bottom) and first (top) floors (see Figure 7 forDepartmental classification)

Figure 9: Overall points of communication in terms of departmental boundaries forthe ground (bottom) and first (top) floors. The use of matching colours forpoints of communication and departmental boundaries illustrate theextent of intra- and interdepartmental communication

within Department J (Planning), as well as between Departments J(Planning), K (Office of the Vice-Rector: Academic Planning), and L(Office of the Vice-Rector: Academic Operations). Based on obser-vations during the mapping surveys, it is concluded that this situationcan be explained more on the basis of adjacency and proximity oflocation in the open plan layout, than as a result of functionallyrelated workplace activities. Similar to the communication behaviourobserved on the first floor, communication on the ground floor wasfound to be primarily intradepartmental. An important observationrelates to employees F1 and F2 in Department F (Office of theRector). According to the communication wheel there was a highfrequency of communication between these two employees. Incomparing this finding with the movement study illustrated in Figure 8and the points of communication in Figure 9 the frequency ofcontact between employees F1 and F2 was confirmed. What issignificant is that these two employees are not located within visual oraudio range, yet have frequent work-related contact. A conclusionto be drawn from this is that an improved adjacency for these twoemployees might contribute to improved job satisfaction, as well asimproved levels of effective and efficient work performance andaccomplishment.

6. Discussion of research resultsThe performance evaluation study of the executive office environ-ment in the Main Building has emphasised a number of importantand highly relevant issues pertaining firstly to workplace planning anddesign in this specific environment, and secondly, to BPE research inworkplace environments in the South African context in general. Inanalogy to previous research on workplace environmental planningstandards and methodologies (Le Roux et al. 2005; Le Roux & Kato,2004; 2003; Le Roux et al. 2001) a discussion of the application valueof the results of the study for the surveyed office environment can bedone according to previously developed database categories. Themost applicable categories for discussion in this paper are:

• Floor area per workspace; and

• Individual workspace area. In addition results will also be discussed in terms of adjacency andproximity of locations and the deployment of spatial resources ac-cording to work style diversity.

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Figure 10: Visualisation of data collected during the communication mapping. Thecommunication wheel clearly illustrates the extent of communicationbetween all employees in the office during the survey. Communicationbetween employees of the ground and first floor was found to be minimal

6.1 Floor area per workspaceFor this part of the analysis, the useable office (departmental) floorarea was calculated. This excluded areas such as primary circulation,staff rooms, tea kitchens, and primary support spaces such as storagerooms, archives, and copy rooms. In this case the floor area of thepersonal suite of the Rector on the ground floor was also excludeddue to the uniqueness of the specific environment. For this discussionon floor area per workspace, two indicators were identified to easethe interpretation and discussion of data. Data for the ground floorindicated the average departmental floor area (indicator 1) to be42.95m2. The average departmental floor area per workspace(indicator 2) was found to be 18.42m2 (refer to Table 6-1).Accordingly, departmental floor areas on the ground floor rangedfrom 29.18m2 (Dept. C) to 64.14m2 (Dept. B), while individualworkspace settings ranged from 14.59m2 (Dept. C) to 21.38m2 (Dept.B) when interpreted in terms of the number of workspace settings perdepartment. Consequently, results of the evaluation of spatialcharacteristics of the ground floor layout indicated that maximumand minimum values for both departmental spaciousness and thespaciousness of individual workspaces were found within similardepartments. Accordingly, the maximum values pertaining to bothindicators were found in Dept. B (Office of the Registrar — GeneralAffairs), while minimum values for both indicators were found in Dept.C (Office for Diversity). Important to note, is the fact that while Dept. Bhas only one employee more than Dept. C (3 as apposed to 2), thedepartmental floor area was more than double that of Dept. C.

Occupation of the first floor was significantly higher than that of theground floor (refer to Table 6-2). Data for the first floor indicated theaverage departmental floor area (indicator 1) to be 84.22m2, while theaverage floor area per workspace (indicator 2) was 15.60m2.Departmental floor areas on the first floor ranged from a minimum of38.68m2 in Dept. L to a maximum of 179.43m2 in Dept. J. Individualworkspaces ranged from a minimum of 12.58m2 in Dept. H to amaximum of 20.93 in Dept. K. Contrary to similar data for the groundfloor, minimum and maximum values for both indicators did not occurwithin similar departments.

Average floor areas per workspace for the overall office environmentare illustrated in Table 6-3. Accordingly, floor area per workspace whenexpressed in terms of the overall available floor area varies from33.91m2 (inclusive of all excluded areas as discussed previously) to16.56m2 (less all excluded areas as previously discussed). Since no

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Table 6-2: Spatial characteristics of the first floor

recommended minimum standards regarding workspace spacious-ness currently exist in South Africa, data from NOPA (the New OfficePromotion Association of Japan) on office planning standards (Le Rouxet al. 2005), as well as literature from The Netherlands (Van Wagenberg,1999) on healthy office building management will be used to compar-atively illustrate recommended standards in this regard.

Table 6-1: Spatial characteristics of the ground floor

Department / area name Overall area (m2) Number of settings Aver. Area persetting (m2)

Dept. A 38.85 2 19.43Dept. B 64.14 3 21.38Dept. C 29.18 2 14.59Dept. D 45.88 3 15.29Dept. E 38.68 2 19.34Dept. F 40.98* (+ 94.61) 2 20.49Total: 257.71 (+ 94.61) 14* (+ 1)Aver./Dept. 42.95Aver./Setting: 18.42

Meeting and support spaces 166.39

Primary circulation 230.23

Total: 654.33* (+94.61)

Note: * Data indicated for Dept. F excludes that of the Rector’s personal suite (94.61m2)

Department / area name Overall area (m2) Number ofsettings

Aver. area persetting (m2)

Dept. G 60.48 4 15.12Dept. H 100.66 8 12.58Dept. J 179.43 11 16.31Dept. K 41.85 2 20.93

Dept. L 38.68 2 19.34

Total: 421.10 27

Aver./Dept.: 84.22

Aver./Setting: 15.60

Meeting and support spaces 114.26

Primary circulation 200.81

Total: 736.17

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Table 6-3: Spatial characteristics of the overall workplace environmenton the ground and first floors (Refer to Table 6-1 and 6-2)

Spatial characteristics: Overall Floor area (m2)

1. Overall useable floor area (excluding the Rector’s suite): 1,390.5041 (+ 1)

2. Overall meeting & support space: 280.65 (20.18%)

3. Overall primary circulation space: 431.04 (31.00%)

4. Overall departmental area: 678.81 (48.82%)

5. Overall number of workspace settings: 41 (+ 1)

6. Average overall floor area / setting (incl. primary circulation,meeting space, and support space): 33.91

7. Average departmental floor area / setting (excl. primarycirculation, meeting space, and support space): 16.56

8. Personal suite of the Rector: 94.61

NOPA — through its ‘New Office Minimum Standard’ — recommendsa minimum of 7 m2 per individual workspace setting. Since thisstandard does not make reference to job function, the Dutchstandard for floor area allocation per job function as per VanWagenberg (1999) is a useful means of comparison (Table 7).

Table 7: Minimum and optimum floor areas of Dutch offices relativeto the functional nature and the required facilities

Function Utilisation Min. floor area(m2)

Optimum floorarea (m2)

Level 1 Basic individual workplace 7 9

Level 2 + additional computer equipment 9 11

Level 3 + additional computer equipment andsufficient workspace for 2 people 11 12



Level 6 Employees with representativeresponsibilities 28 28

The Dutch example (Table 8) aims to enable the objective allocationof workspace in the office according to actual occupation and therequired level of office automation and IT in the specific workspace.

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The comparison of the spatial characteristic of the Main Buildingworkplace environment is thus similarly an exercise in evidence-based reasoning and decision-making with regards to the utilisationof spatial resources (Figure 7).

Table 8: Comparison of floor areas in the Main Building officeenvironment with those recommended by the Dutchstandard

Dutch Standards (Table 7) Main Building

Function Min. floorarea (m2)

Optimum floorarea (m2) Employee / Department Area (m2)

Level 1 7 9 Employee C2: (Office forDiversity) 12.34

Level 2 9 11 Employee G3: (CommunityService) 12.20

Level 3 11 12 Strategic Communication 21.74

Level 4 13 14 Planning (current) 58.53

Level 5 18 18 Planning (future) 58.53

Level 6 28 28

Employee A1: (Office for theVice-Rector: Student Affairs) 28.60

Employee F3: (Office of theRector — personal suite) 94.61

6.2 Individual workspace areaAn interesting comment resulting from the questionnaire survey wasemployees’ mixed response with regard to workspace spaciousness.More responses were received of individual workspace being toolarge (n = 5; f = 0.07) than the same workspace being too small (n = 4;f = 0.06). Workspace in the open plan office area measured onaverage 2.15 m2 while those in the enclosed offices were 3.13 m2(Table 3).

6.3 Adjacency and proximity of location As was mentioned previously in the discussion of the results of themovement and communication mapping (refer to section 4.3) thefrequency of movement and communication between employees,as well as the effectiveness thereof, can be managed through theimproved understanding of adjacency relationships and the proximityof location. Most workplace layouts accommodate employees onthe basis of adjacency decisions that use spatial proximity to address

decision-making on where employees should work. This means thatemployees are accommodated where they are closest to those theyhave frequent interaction with.

According to research by Becker (1990) workplace planning anddesign methodologies that support spatial mobility effectively shiftthe focus from the design of individual ‘cockpit’ workplace settingswhere employees are functionally isolated, to the notion of the officeas system of loosely coupled settings appropriated on the basis offunctional need. Considerations on adjacency and proximity thuseither enforce departmental cohesion by grouping people closelytogether, or employ the concept of ‘functional inconvenience’ tolocate employees in such a manner as to promote cross-functionalinteraction and awareness.

Given the strongly departmental character of movement andcommunication in the surveyed office environment, careful consider-ation based on the organisational character and objectives mightsuggest a different approach to accommodating selected employ-ees and functional groups. The most visible example in this regard isEmployees F1 and F2 (Office of the Rector) who had frequent work-related contact, yet were situated out of visual and audio range ofeach other. Rethinking such relationships on the basis of data resultingfrom the movement and communication mappings could improvefunctional cohesion and improve perceptions of the office environ-ment’s level of serviceability (the extent to which the office layoutaccommodate user requirements and work style diversity).

6.4 Deployment of spatial resources according to workstyle diversity

A last discussion on the results of this study pertains to the acknow-ledgement of employee and work style diversity. Data presented inDiagram 3 on the relationship between time spent at individual work-spaces and time spent in the office emphasises the need for recog-nition that there are real differences in the way people work. However,mere acknowledgement of these differences will not help employeesto exercise autonomy with regards to the time and place according towhich work is structured and performed. Considerations in this respectare of special importance for employees identified as runners andwalkers (employees that either spends more than 60% of their time inthe office but less than 60% of the time working at individual work-spaces, or employees that spend less than 60% of the time in the

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office). Special measures such as core time (a set time during the dayduring which all employees must be present in the office, for example,between 11:00 and 15:00) will help highly mobile employees such asthose identified in quadrant 3 (refer to Diagram 3) to be more ef-fective and productive in performing their workplace activities.

Adoption of such strategies has the added benefit of enabling abetter work-life balance since the focus moves from controlling theprocess (time in the office) to managing and facilitating work per-formance and accomplishment.

7. Conclusion and recommendationsConclusions from this body of research can be drawn on variouslevels. The most significant to be discussed here relates to the rele-vance of this study and its findings for the improvement of the MainBuilding workplace environment in terms of its functionality andserviceability levels, and the educational value thereof in sensitisingstudents to the opportunities for, and value of person-environmentstudies in architecture.

Since the Main Building workplace environment was refurbished withwork performance innovation in mind, the findings of this study serveas a benchmark of the level of achievement in terms of employeesatisfaction with the environments level of serviceability. Employeeand work style diversity as discussed in this article in response to theresearch results imply that different employees will have differentneeds based on the work they are performing. According to Becker(1990) optimal settings for work performance should vary accordingto changes in work content over time. Given the emergence ofincreased spatial mobility in the performance of work amongemployees in the Main Building office environment, considerationsregarding facility flexibility and serviceability are deemed ofrelevance for this specific office environment. The Main Building’snew status as an executive office further emphasises the need forimplementing alternative solutions to the allocation and appro-priation of spatial resources. This includes the careful assessment ofspecific work style diversities and the provision of dedicated spacefor concentrated work for employees in the open plan office.Although alternative staffing typologies and workplace strategies onthe basis of work performance characteristics require more effort interms on proper management, the autonomy provided to employ-ees to perform their work when, where, and how they deem neces-sary, is highly conducive to improved levels of employee satisfaction

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and productivity (Clements-Croome, 2000). Since employees regard-ed the lack of space for private or concentrated work as one of theperformance inhibiting aspects of the new office environment, thisaspect should receive proper attention. Another aspect which wasalso perceived as contributing negatively to the working environ-ment — the noise resulting from wooden floors, as well as problemsrelated to the movement of the wooden floor — should similarly beaddressed in an effort to improve the user-satisfaction with theworkplace environment.

Results of the questionnaire were highly effective in identifying spe-cific areas of user-dissatisfaction. The most frequent aspect whichemployees complained about was the lack of storage and filingspace. This problem can be addressed by providing better access tothe existing filing cupboards in the open plan workspace. By allo-cating individual filing space to each employee would also addressthe complaint regarding inadequate storage space for documentsat individual workspaces. Complaints pertaining to the archive beingtoo small can similarly be addressed by adopting a more organisedfiling system and a better spatial planning in the archive room. Inaddition, complaints about the archive not being dust proof shouldbe attended to as soon as possible.

Complaints pertaining to noise and movement of monitors on desksdue to employee circulation across the wooden floor are however,more difficult to address. Although loose carpets might provide thenecessary dampening of sound and causes less movement of thewooden floor structure, careful consideration should be given to theimpact thereof on general employee safety. This refers specifically toaspects of slip resistance. An added benefit of using loose carpets inthis manner might be its contribution to the executive nature of theoffice. Another performance inhibiting aspect of the open planoffice is that of inadequate meeting spaces. Complaints by employ-ees regarding the low level of use of visitor spaces provide a solutionto this problem. Visitor spaces can be used as secondary meetingspaces — thereby using such areas more effectively. Complaintspertaining to inadequate storage spaces in meeting areas should beaddressed simultaneously to ensure all meeting spaces enjoying ahigh level of accessibility and ease of use. By doing so, the formalmeeting rooms, combined with the visitor spaces serving assecondary meeting areas, can form a network of meeting spacesand facilities throughout the office environment. Implementation ofthis solution would contribute to the workplace layout becoming

30


more efficient through its support of user-diversity, while also ensuringthe optimisation of resources.

A last aspect perceived by employees as inhibiting performance isthat of copiers being too far from individual workspace. At present, acentral copy room is provided which contains the photocopy units aswell as paper and other related consumables. Given the length ofthe open plan office and the fact that it is located on three floors(including the basement work area), the current policy of expectingemployees to use an inconveniently placed central copy roomcontributes to dissatisfaction employees have with regards to theworkplace layout. This specific problem can be addressed bylocating photocopiers in distributed areas throughout the open planoffice where they will be more accessible to employees. Thisarrangement will result in less time being spent on movement andcirculation in the office (refer to Diagram 1) and thus contributetowards higher levels of user-satisfaction while creating an oppor-tunity for increased productivity. The distribution of photocopiersthroughout the open plan office might also address the problem ofmovement of the wooden floor caused by high levels of movementbetween individual workspaces and support spaces.

In addition to the direct implications of this survey and its results for thesurveyed office environment, the survey also had an important edu-cational value for students of architecture. By sensitising students tothe importance of the reciprocal relationships between architectureas the built environment and people as the primary users thereof, theobjectives of person-environment studies as discussed under theheading Research Objectives are also promoted.

The inclusion of these concepts within the curriculum or architecture,together with the research activities of the Centre for People andBuildings — South Africa (CfPB-SA) at the Department ofArchitecture, UFS ensures that graduates are made aware of theirresponsibility to consider the impact of their designs on the builtenvironment and to formulate more responsive design solutions. Thediscussion of research results contained in this article will be used toformulate a feedback to the Office of the Director: PhysicalResources & Special Projects, UFS who was responsible for the overallrefurbishment of the existing Main Building into an executive officeenvironment. Follow-up studies are planned as part of an ongoingperformance evaluative approach to office place-making in theMain Building office environment.

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ReferencesBecker, F. 1990. The Total Workplace: Facilities Management and theelastic organization. New York: Van Nostrand Reinhold.

Clements-Croome, D. 2000. Creating the Productive Workplace.London: E & FN Spoon.

Kato, A., Le Roux, P.C., & Tsunekawa, K. 2005. Building PerformanceEvaluation in Japan (Chapter 14). In: Preiser, W.F.E. & Vischer, J.(eds.). Assessing Building Performance. Amsterdam: Butterworth-Heinemann.

Le Roux, P.C. 2006. Building Performance Evaluation (BPE) in theDesign Studio. (In the process of being published).

Le Roux, P.C. 2005. Towards the Improvement and Optimization ofFacilities on the Campus of the University of the Free State. 2005Annual Conference of the South African Facilities ManagementAssociation. October 10-11, 2005, Midrand, South Africa, CD-Rom.

Le Roux, P.C., Kato, A. & Tsunekawa, K. 2005. A Comparative Studyon Building Performance Evaluation Methodology. Journal ofArchitecture, Planning and Environmental Engineering, 589, p. 41.

Le Roux, P.C., Kato, A. & Tsunekawa, K. & Shiozaki, H. 2005. A Study onthe Application of Current and Anticipated Work Style Diversity.Journal of Architecture, Planning and Environmental Engineering,594, p. 33.

Le Roux, P.C. & Kato, A. 2004. Workplace Environmental Satisfactionas an Indicator of Building Performance. Architectural Institute ofJapan Tokai Branch Technical Research Report, 42, p. 597-600.

Le Roux, P.C., Kato, A., Taniguchi, G. & Tsunekawa, K. 2001. StaffingTypologies and Placemaking: Workplace planning methodologies inthe new Kokuyo Nagoya Office. Architectural Institute of Japan TokaiBranch Technical Research Report, 39, p. 657-660.

Preiser, W., Rabinowitz, H. & White, E. 1988. Post-OccupancyEvaluation. Van Nostrand Reinhold.

SAFMA. 2005. What if? Exploring the opportunities and challenges.Proceedings of the 2nd SAFMA Conference, 10 11 October 2005,Midrand, South Africa. CD-Rom.

Van Wagenberg, A.F. 1999. Gezond Beheren van Kantoorgebouwen.Stichting ISSO / Bouwresearch (Building Research Institute).

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33

GJ Crafford & JJ Smallwood

Clients’ views on quantity surveyingcompetenciesPeer reviewed

AbstractTraditionally, quantity surveyors have fulfilled the function of financial andcontract controller of projects and therefore proficiency in the relatedcompetencies is important. However, the quantity surveying profession hasendeavoured to broaden the role of Quantity Surveyors to include inter alia,project management, and facilities management in recent years. The article reports on the quantity surveying component of a study relative tothe competencies of five built environment practitioners conducted amongprivate and public sector clients. The focus of the study was to determine theimportance of competencies, and the extent to which they manifestthemselves. Based upon inter alia, principal component analysis, findingsinclude that the top two of five factors, namely ‘Financial planning andcontrol’ and ‘Contract administration’, include the traditional quantitysurveying competencies.Recommendations include inter alia, tertiary institutions, the South AfricanCouncil of Quantity Surveying Profession (SACQSP) and the Association ofSouth African Quantity Surveyors (ASAQS) should address the perceiveddeficiency relative to the competencies identified by the gap analysis,particularly those competencies that achieved evidence scores below that ofthe overall average evidence score.Keywords: clients, competencies, quantity surveyors

Gerrit Crafford, Department of Building and Quantity Surveying, Nelson MandelaMetropolitan University, PO Box 77000, Port Elizabeth, 6013, South Africa. (DrCrafford is currently working as Quantity Surveyor, Rogerson Reddan &Associates, 78 Haddington Road, Dublin 4. Ireland), Tel: 00353 1 6609155 Fax:00353 1 6609694, Email: <[email protected]>

Prof. John Smallwood, Department of Construction Management, NelsonMandela Metropolitan University, PO Box 77000, Port Elizabeth, 6013, South Africa.Tel: (041) 504 2790 Fax: (041) 504 2345 E-mail: <[email protected]>

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AbstrakTradisioneel het bourekenaars die funksie van finansiële- en kontrak beheervan projekte vervul. Daarom is bekwaamheid van hierdie persone belangrik.Die bourekenaars-professie het daarna gestrewe om die rol van Bourekenaarste verbreed deur onder andere deesdae ook as projekbestuurders en fasiliteitbestuurders op te tree. Die artikel lewer verslag oor die bourekenaars komponent van ’n studie watgedoen is onder privaat- en openbare sektor kliente om die bekwaamheidvan vyf praktyke in die bou-industrie vas te stel. Die fokus van die studie wasom die belangrikheid van bekwaamheid te bepaal. Die studie het bevind datdie twee mees uitstaande faktore naamlik Financial planning and control enContract administration deel vorm van die tradisionele bourekenaarsbekwaamheid. Aanbevelings sluit onder andere in dat tersiêre instansies, die Suid-AfrikaanseRaad vir bourekenaars en die Vereniging van Suid-Afrikaanse BourekenaarsProfessie (VSABP) die tekortkominge soos uiteengesit in die analise en veraldaardie tekortkominge wat laer as die gemiddelde telling was, aandag moetgeniet. Sleutelwoorde: kliente, bekwaamheid, bourekenaars

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Crafford & Smallwood • Clients’ views on quantity surveyingcompetencies

1. Introduction

Built environment professionals are charged with the responsibilityof assessing clients’ needs and realising a productive designthrough added value engineering. This requires the continuing

development of skill, application and experience in the knowledge-intensifying cycle (Council for Scientific and Industrial Research,2004). The following quotation included in the South AfricanConstruction Industry Status Report — 2004, published by theConstruction Industry Development Board (CIDB) (2004), providesinsight relative to the performance of the design team: “The quality ofdelivery varies and clients expressed dissatisfaction particularly withregard to timely preparation of designs, handling of variations,invoicing and final settlement of accounts.”

This article is based upon a component of a Doctoral study, andreports on the competencies of quantity surveyors based uponresponses emanating from private and public sector clients. The inputgathered from clients is invaluable as they in essence constitute theprimary customers of quantity surveyors, and therefore their input caninform the practice of quantity surveying. The Johari window can be

Figure 1: Johari windowSource: Robbins, 1998

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used to explain the importance of input gathered from others andfrom self-disclosure. The combination of disclosure and feedbackcan enlarge the congruence area of the Johari window (Figure 1) aswell as help to identify areas of focus for relevant future educationand training of quantity surveyors (Nkado, 1999).

According to Robbins (1998), proponents of the Johari window implythat perceptual accuracy and communication would be improvedif the size of the Public area were expanded by increasing self-disclosure and by acceptance of feedback from others even if suchfeedback is unflattering.

Nkado (1999) and Crafford (2002) conducted research relative tothe competencies required by quantity surveyors using quantitysurveyors, architects and engineers as the target population. Thus, itcan be argued that self-disclosure did take place and that the JohariPublic area was widened.

The aim of this research is to:

• obtain feedback from the clients on the competenciesrequired by quantity surveyors;

• reveal the extent to which quantity surveyors realise clientrequirements as per client perception, and

• develop a meaningful model of the competencies. The research broadly follows the approach adopted by Nkado(1999) and Crafford (2002). Upon completion of the research theJohari Public area should be even larger, yielding vital feedback forthe quantity surveying profession.

A justification for a study of competencies required by the designand construction team is that the ability of the design and con-struction team to meet the differing and changing client needsdepends on the knowledge base of each discipline. Prokesch (1997)advocates that building and leveraging knowledge is the key tosuccess in this age of globablisation, while Male (1990) opines thatknowledge is an important power base for professions generally.

2. Quantity surveying competencies The quantity surveyor is essentially a building economist, advisingclients and architects on costs of alternative designs to ensure thatthe project is kept within the agreed budget (Seeley, 1997). Leveson(1996) indicates that quantity surveying competencies lie in the

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financial and contractual control of the building project, but advisesquantity surveyors to pay attention to developing interpersonal skills.

The RICS Assessment of Professional Competence (APC) is primarilycompetency-based. It requires candidates to demonstrate that theyhave the skills and abilities needed to perform specific tasks orfunctions. These are based on attitudes and behaviours as well asskills and knowledge. The specific competencies candidates mustachieve depend on the APC pathway being taken. There is an APCpathway for each of the discipline areas in which quantity surveyorswork. As competence can be demonstrated on the basis of actualwork experience, the pathway will be determined by the candi-date’s employment. The candidate’s supervisor and counsellor willadvise the candidate on which pathway to follow. The APC path-ways are as follows (RICS, 2006):• Art and antiques;• Building control;• Building surveying;• Commercial property practice;• Environment;• Facilities management;• Geomatics;• Housing management and development;• Machinery and business assets;• Management consultancy;• Minerals and waste management;• Planning and development;• Project management;• Property finance and investment;• Quantity surveying and construction;• Research;• Residential property practice;• Residential survey and construction;• Rural;• Taxation allowances, and • Valuation.

Each APC pathway requires a period of structured training duringwhich the candidate completes the mandatory and technicalcompetencies that make up the minimum requirements for the APC(RICS, 2006). The competencies have three levels of attainmentwhich are progressive in terms of skills and abilities (RICS, 2006):• Level 1 — knowledge and understanding;• Level 2 — application of knowledge and understanding; and• Level 3 — reasoned advice and depth of technical

knowledge.

The candidate must satisfy three types of competency (RICS, 2006):• Mandatory competencies — personal, interpersonal and

business skills common to all pathways;• Core competencies — primary skills of the chosen APC

pathway; and• Optional competencies — selected by the candidate with

the supervisor and counsellor from the list for the chosenpathway.

2.1 Mandatory competenciesThese competencies are a mix of professional practice, interper-sonal, business and management skills that are considered commonto, and necessary for, all surveyors. These competencies are com-pulsory for all candidates. Candidates must achieve the followingminimum standards (RICS, 2006):

To level 3:• Conduct rules;• Ethics; and• Professional practice.

To level 2:• Client care;• Communication and negotiation; and• Health and safety.

To level 1:• Accounting principles and procedures;• Business planning;

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39


• Conflict avoidance, management and dispute resolutionprocedures;

• Data management;• Sustainability; and • Team working.

2.2 Technical competenciesFor each APC pathway, specific technical competencies must beachieved. The competencies are divided into core and optional. Forsome pathways there will be an element of choice in the corecompetencies. For the optional competencies a choice must bemade from the APC pathway list. For some pathways one optionalcompetency can be taken from the full list of technical com-petencies. Some pathways allow candidates to select a mandatorycompetency as an optional and take it to a higher level (RICS, 2006).

For the purposes of this research the quantity surveying route waschosen and the core and optional competencies are discussedbelow (RICS, 2006).

Core competencies — a minimum of (RICS, 2006):

• Conflict avoidance, management and dispute resolution— to level 2;

• Construction technology and environmental services — tolevel 2;

• Contract practice — to level 3;

• Design economics and cost planning — to level 3; and

• Health and safety — to level 2.

Optional competencies — from the full list of competencies, aminimum of (RICS, 2006):

• Two competencies — to level 3; and

• Two competencies — to level 2.

The full list of competencies is presented in Table 1 below.

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• Access and easements for power,water and communicationsinfrastructure, including way leaves

• Information technology

• Accounting principles and procedures • Inspection

• Agriculture • Insurance and risk management

• Analysis of client requirements • Landlord and tenant

• Asset and investment planning • Land use and diversification

• Auctioneering • Law

• Building pathology • Leadership

• Business management • Local taxation / assessment

• Cadastre and land management • Maintenance management

• Capital allowances and grants • Management of the built environment

• Capital taxation • Management of the naturalenvironment

• Collection, retrieval and analysis ofinformation and data • Managing people• Commercial management ofconstruction • Managing resources• Compulsory acquisition andcompensation • Mapping• Conflict avoidance, managementand dispute resolution procedures • Marketing• Conservation and restorationmanagement • Measurement• Construction technology andenvironmental services

• Measurement and costing ofconstruction works

• Consultancy skills • Minerals management

• Contaminated land • Negotiating skills

• Contract administration • Object identification

• Contract practice • Option appraisal • Corporate and publiccommunications • Planning

• Corporate finance • Procurement

• Corporate real estate management • Project audit

• Corporate recovery and insolvency • Project cost and financial control

• Customer care • Project evaluation

• Design and specification • Project process and procedures

• Design economics and cost planning • Project strategy and control

• Development appraisals • Purchase disposal and leasing

• Development / project briefs • Real estate finance and funding

• Economic development • Real estate management

• Engineering surveying • Real estate management accounting

• Environmental assessment • Real estate records

• Environmental audit • Recruitment and selection

Table 1: List of APC competencies (RICS, 2006)

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• Access and easements for power,water and communicationsinfrastructure, including way leaves

• Information technology

• Environmental awareness • Remote sensing and photogrammetry

• Environmental management • Research methodologies

• Environmental sustainability • Risk management• Ethics, professional identity andaccountability • Securitisation

• Financial risk management • Selecting the project team

• Forestry and woodland management • Self management

• Geodesy • Spatial data capture and presentation

• GIS • Specification preparation

• Ground engineering and subsidence • Strategic real estate consultancy

• Health and safety • Surveying land and sea

• Housing aid or advise • Team working• Housing maintenance, repair andimprovements • Use of the marine environment

• Housing management and policy • Valuation

• Housing strategy and provision • Verbal communication

• Hydrographic surveying • Works progress and qualitymanagement

• Information integration andassimilation • Written and graphic communication

3. Research

3.1 MethodologyThe descriptive survey method was employed to process the dataobtained through observation. This type of research involves eitheridentifying the characteristics of an observed phenomenon, orexploring possible correlations among two or more phenomena. Inevery case, descriptive research examines a situation as it is. It doesnot involve changing or modifying the situation under investigation,nor does it intend to determine cause-and-effect relationships (Leedy& Ormond, 2005). Thus, it observes existing conditions artificially, and islimited to ascertaining and describing the characteristics of thevariables of interest in a given situation (Cropley & Harris, 2004).

An exploratory study was conducted to enable the development ofan optimum list of competencies. A qualitative approach wasadopted during this phase which entailed the interviewing of tenArchitects, Construction Managers, Engineers, Project Managers,and quantity surveyors in the Eastern Cape and Western Cape. The

interviews investigated the various disciplines’ understanding of theirown competencies, and the competencies of the other disciplines’,with the possibility of adding additional competencies to the pilotquestionnaire. Subsequently, during the primary study, a quantitativemethod of data production using a questionnaire was followed.

The populations of respondents in the primary study can be dividedinto two categories:

• Public sector clients — a mailing list of all the MunicipalManagers in South Africa was obtained from theDepartment of Water Affairs and Forestry; and

• Private sector clients — a mailing list of all the propertydevelopers in South Africa was obtained from the SouthAfrican Property Owners Association (SAPOA).

The total number of property developers or private sector clients onthe SAPOA mailing list totalled 74 members. The total number ofMunicipality managers or public sector clients on the mailing listobtained from the Department of Water Affairs and Forestry totalled284.

3.2 Questionnaire designThe questionnaire consisted of three sections. Section one consistedof demographic questions, which were later used to test if any of thevariables had a significant influence on the rating of thecompetencies.

In section two each disciplines’ competencies were listed inalphabetical order with two accompanying scales, namely level ofimportance and evidence of competencies. The questionnaire wasdesigned to include all the competencies which were gatheredduring the survey of the literature and during the exploratory phaseinterviews. The method of presenting all the competencies and thenasking the respondents to rate the competencies according tocurrent importance and evidence on the Likert scale was adoptedfrom Nkado (1999). The two scales were:

• The level of importance of a competency for a career in aspecific discipline at present, from 1 (not important) to 5(very important); and

• How evident that competency is in the specific disciplinein South Africa, from 1 (poor) to 5 (excellent).

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Section three included a scale in which the respondents had to ratethe level of importance of the performance parameters to clients,from 1 (not important) to 5 (very important).

3.3 Sample size and response rateKrejcie & Morgan (1970) suggest appropriate sample sizes foreffective representation of the target population. However, theauthors deemed it erudite to conduct a census of the target pop-ulation due to the poor response rate in construction relatedquestionnaires.

Of the 358 questionnaires posted, 59 were returned twelve weeksafter the initial mailing — this equates to a response rate of 16.8%.However, 8 of the returned responses could not be included in theanalysis of the data as not a single response had been recordedthereon. No reasons were given for returning the questionnairesblank. Therefore, the effective response rate was 14.5% as shown inTable 2. However, when comparing the amount of completedquestionnaires to sample size recommended by Krejcie & Morgan(1970), it represents a 22.8% response rate. This response rate is not farbelow the 25% response rate recommended by Nkado (1999) forconstruction research.

Table 2: Analysis of respondent sample

SectorUseful

questionnaires(No.)

Questionnairesposted (No.)

Requiredsample size

(No.)

Response rateof census (%)

Response rate ofrequired sample

size (%)

Public 38 284 165 13.4 23.0

Private 14 74 63 18.9 22.2

Total 52 358 228 14.5 22.8

3.4 Rescaling dataRe-scaling is an explanatory, rather than causal analysis as therescaled values are for the full set of observations over all theconstructs that are rated. This limitation means that rescaling doesnot indicate how each respondent used the scale for each state-ment that was rated. According to Bendixen & Sandler (1995) “insome instances, the subsequent analyses produce results that arealmost identical to those obtained when the assumption that the

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original ordinal data behaved in an interval fashion was made or thatthe analytic techniques used were sufficiently robust. However, inequally as many instances, the interpretation of subsequent analyseswas ‘cleaner’, easier and more precise.”

Bendixen & Sandler (1995) and Nkado & Meyer (2001) argue that thisprocedure is essential for parametric manipulation and interpretationof the raw data. The conversion of the Likert scale was performedseparately for each of the three sets of ratings of importantcompetencies, evidence of the competencies and futureimportance of the competencies. Table 3 illustrates the conversionsfor ratings of important competencies based on a correspondenceanalysis of the ratings received for the 25 competencies. Therescaling shows that any assumption that the original ratings intervalin nature would be questionable.

Table 3: Re-scaling for rating of important current competencies

Likert scale of importance

Eigen Value Cumulative percentretained

Axis 1 0.20446 68.91

Axis 2 0.04930 85.52

Axis 1 co-ordinate

Axis 2 co-ordinate

Euclideandistance

Adjustedscale

1 Not important 0.818 -0.616 1.0000

2 Less than important 0.930 -0.293 0.8626 1.8626

3 Important 0.669 -0.218 0.3909 2.2536

4 More than important 0.131 0.267 1.4540 3.7076

5 Very important -0.468 -0.126 1.2924 5.0000

3.5 Relative importance of competenciesAfter re-scaling the ordinal data to interval data, the means of thecompetencies were computed. The means were then converted topercentage ratings. Table 4 presents the importance and evidenceratings, and the percentage gap between the aforementionedwhich is calculated by obtaining the difference in the importancepercentage and evidence percentage.

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Table 4: Importance and evidence of quantity surveyingcompetencies

Competency headingRating (%)

Gap (%)Importance Evidence

QS07 Cost control 94.6 82.0 15.7

QS10 Estimating 94.5 80.9 16.9

QS17 Measurement (Quantities) 94.5 83.6 13.5

QS19 Plan reading 93.3 86.2 8.9

QS09 Economics of construction 89.2 76.5 15.8

QS22 Professional practice 88.6 81.1 9.4

QS04 Construction contract practice 88.5 82.0 8.2

QS03 Computer literacy and informationtechnology 86.9 83.1 4.8

QS21 Procurement 82.6 79.7 3.7

QS29 Skills to work with emerging contractors 82.3 67.7 18.2

QS31 Time management 82.3 79.3 3.7

QS32 Valuation 82.0 78.7 4.2

QS20 Planning and organising skills 80.7 78.2 3.2

QS08 Development appraisal 80.0 74.9 6.4

QS06 Coordinating 79.8 75.4 5.4

QS27 Risk management 79.0 71.2 9.8

QS33 Value management 78.6 76.5 2.7

QS05 Construction technology andenvironmental services 77.5 77.3 0.3

QS15 Management of joint quantity surveyingappointment 77.4 69.1 10.5

QS25 Quality management / control 77.1 75.8 1.6

QS23 Project management 76.6 76.8 0.2

QS01 Advanced financial management 76.5 71.9 5.7

QS18 Personal and interpersonal skills 75.1 79.8 5.9

QS30 Structural knowledge 75.0 72.9 2.6

QS13 Leadership and general management skills 74.4 73.5 0.1

QS28 Skills in managing a business unit 73.5 71.4 2.7

QS02 Arbitration and other dispute resolutionprocedures 73.1 66.9 7.9

QS12 Law 68.2 69.2 1.3

QS24 Property investment funding 65.0 62.8 2.7

QS26 Research methodologies and techniques 64.7 67.3 3.3

QS11 Facilities management 63.1 68.5 6.7

QS14 Macro-economic perspectives 62.2 68.8 8.2

QS16 Marketing 54.3 61.6 9.2

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The five most important current competencies required by quantitysurveyors as ranked by clients are cost control, estimating, measure-ment, plan reading, and economics of construction. All the compe-tencies were ranked as above average in terms of current import-ance. This supports Male’s (1990) statement that the principal com-petencies of measurement, financial and contractual control ofconstruction projects underpin the practice of quantity surveying.

The five competencies that quantity surveyors are most proficient inaccording to clients are plan reading, measurement, computer liter-acy and information technology, cost control, and constructioncontract practice.

The top five competencies in terms of deficiency as represented bythe gap analysis are skills to work with emerging contractors,estimating, economics of construction, cost control, and measure-ment (quantities). It is notable that four of these are among the fivemost important current competencies. Furthermore, the sixth highestdeficiency is relative to management of joint quantity surveyingappointment.

3.6 Principal Component AnalysisPrincipal Components Analysis (PCA) is a data analysis tool that isusually used to reduce the dimensionality or number of variables of alarge number of interrelated variables, while retaining as much of theinformation or variation as possible. PCA calculates an uncorrelatedset of variables such as factors or PCs. These factors are ordered sothat the first few retain most of the variation present in all of theoriginal variables. Unlike its cousin Factor Analysis, PCA always yieldsthe same solution from the same data, apart from arbitrary differ-ences in the sign.

The computations of PCA reduce to an eigenvalue-eigenvectorproblem. NCSS uses a double-precision version of the modern QLalgorithm as described by Press (1986) to solve the eigenvalue-eigenvector problem.

PCA was applied to ratings of importance of the 33 competencies inthe questionnaire. The principal analysis was carried out on the re-scaled data. Several methods have been proposed for determiningthe number of factors that should be kept for further analysis. Severalof these methods will now be discussed. However, remember thatimportant information about possible outliers and linear depend-

encies may be determined from the factors associated with therelatively small eigenvalues, so these should be investigated as well.

Kaiser (1960) proposed dropping factors whose eigenvalues are lessthan one, since these provide less information than is provided by asingle variable. Jolliffe (1972) feels that Kaiser’s criterion is too large.He suggests using a cut off on the eigenvalues of 0.7 whencorrelation matrices are analysed. Other authors note that if thelargest eigenvalue is close to one, then holding to a cut off of one maycause useful factors to be dropped. However, if the largest factors areseveral times larger than one, then those near one may be reasonablydropped.

Another criterion is to preset a certain percentage of the variationthat must be accounted for and then keep enough factors so thatthis variation is achieved. However, usually this cut off percentage isused as a lower limit. That is, if the designated number of factors donot account for at least 50% of the variance, then the whole analysisis aborted.

Cattell (1966) first documented the scree graph. Studying this chart isprobably the most popular method for determining the number offactors, but it is subjective, resulting in differing people analysing thesame data, but with differing results. The scree plot is a rough bar plotof the eigenvalues, which enables immediate determination of therelative size of each eigenvalue. Many authors recommend it as amethod of determining how many factors to retain. The word scree,first used by Cattell (1966), is usually defined as “the rubble at thebottom of a cliff.” When using the scree plot, the eigenvalues whichconstitute the ‘cliff’ must be differentiated from the ‘rubble’ — thefactors which constitute the ‘cliff’ are retained. Cattell & Jaspers(1967) suggest that those which constitute the ‘cliff’ plus the firstfactor of the ‘rubble’ be retained.The following methodology was adopted relative to the selection offactors:• All factors with an eigenvalue greater than one were

eligible for selection;• Visual inspection of the scree plot was undertaken to see

where the ‘knee’ is. The ‘knee’ of the curve indicates thenumber of factors to use;

• The percentage of total variance should generally beabove 35% (Nkado, 1999; Zikmund, 1994); and

• All the variables should be represented in the factorschosen.

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48


Figure 2: Quantity Surveyor’s Eigenvalue scree plot

The first ten factors all had eigenvalues higher than one, but whenlooking at the scree plot it can be seen that only five are needed. Thefive factors explain 61.6% of the inertia, which is above the 35%needed. The Varimax rotation of the five-factor solution was used sothat only one factor gets a high loading for each competency in orderto simplify the interpretation of the factors. The factor loadings after theVarimax rotation are shown in Appendix 7. It should be noted that onlythe loadings greater than 0.4 were considered to be relevant. Vari-ables loaded onto more then one factor were placed under thefactor that the variable had the highest loading. Table 5 presents allthe competencies under their respective factor headings, includingtheir rankings for current importance and evidence of competency.

Table 5: Factor Structure Summary after Varimax Rotation

Ref FactorLoading Quantity Surveying competency

RankImportance Evidence

Factor 1: Core technical and general management skillsQS17 -0.496321 Measurement (Quantities) 3 2QS18 -0.404652 Personal and interpersonal skills 23 8QS23 -0.593813 Project management 21 14

QS26 -0.455421 Research methodologies andtechniques 30 30

QS29 -0.427637 Skills to work with emergingcontractors 10 29

QS30 -0.813442 Structural knowledge 24 21QS31 -0.628055 Time management 10 10

Average of ranks 17.3 16.3

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Ref FactorLoading Quantity Surveying competency

RankImportance Evidence

Factor 2: Financial planning and controlQS07 -0.710398 Cost control 1 4QS10 -0.806625 Estimating 2 7

Average of ranks 1.5 5.5Factor 3: Contract administration

QS01 0.520905 Advanced financial management 22 22QS04 0.79554 Construction contract practice 7 5

QS05 0.501241 Construction technology andenvironmental services 18 13

QS08 0.593621 Development appraisal 14 19QS09 0.536542 Economics of construction 5 15QS21 0.434016 Procurement 9 9QS22 0.607119 Professional practice 6 6

Average of ranks 11.6 12.7Factor 4: Control and decision making

QS03 -0.583648 Computer literacy and informationtechnology 8 3

QS06 -0.665509 Coordinating 15 18QS19 -0.562997 Plan reading 4 1QS25 -0.535748 Quality management / control 20 17

Average of ranks 11.8 9.8Factor 5: Commercial Management

QS02 -0.494321 Arbitration and other disputeresolution procedures 27 31

QS11 -0.478954 Facilities management 31 28QS12 -0.775524 Law 28 25

QS13 -0.744793 Leadership and generalmanagement skills 25 20

QS14 -0.684322 Macro-economic perspectives 32 27

QS15 -0.627105 Management of joint quantitysurveying appointment 19 26

QS16 -0.613609 Marketing 33 33QS20 -0.571566 Planning and organising skills 13 12QS24 -0.652098 Property investment funding 29 32QS27 -0.422768 Risk management 16 24QS28 -0.598811 Skills in managing a business unit 26 23QS32 -0.547028 Valuation 12 11QS33 -0.676898 Value management 17 16

Average of ranks 23.7 23.7

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The competencies that are loaded onto Factor 1 are mostly coretechnical competencies and managerial competencies. Hence thename ‘Core competencies and general management skills’. Theaverage importance ranking of the competencies for this factor is17.3, which results in a rank of fourth among the factors. This factorsupports Factor 2 and 3, which encompasses competencies withhigher importance ratings.Factor two comprises of the two competencies which can be seen ascore traditional competencies to the quantity surveying profession. Thisfactor is labelled as ‘Financial planning and control’. The averageimportance ranking of the competencies for this factor is 1.5, whichresults in a rank of first among the factors. Since the competenciespresent in this factor is ranked the highest in terms of current import-ance it is also considered to be one of the principal factors as depict-ed in the model (Figure 3).Factor three encompasses most of the competencies related to theadministration of contracts. Thus, this factor is named ‘Contractadministration’. The average importance ranking of the competenciesfor this factor is 11.6, which results in a rank of second among thefactors. This factor along with Factor two is considered to be the prin-cipal factors as indicated in the model (Figure 3).Factor four is named ‘Control and decision making’. The main reasonfor the name is due to the fact that the co-ordinating and qualitycontrol competencies are included in this factor. The average import-ance ranking of this factor is 11.8, which results in a rank of third amongthe factors.Factor five consists mostly of competencies required for managing acommercial business. Thus the factor is named ‘Commercial manage-ment’. The average importance ranking of this factor is 23.7, resulting inthe lowest ranking among all the factors.

3.7 ModelThe model indicates that the factors are interdependent and interact.The model also indicates that Factors 2 and 3, which consist of theprimary competencies for effective quantity surveying are supportedby Factors 1, 4, and 5, which are mostly secondary competencies.These factors in turn are influenced by the inter-relationships betweenthe practitioners, continuing professional development (CPD) / re-search and universities, which in turn are influenced by the RICS,ASAQS, and SACQSP. These three organisations are ultimately influ-enced by the local and global environment.The model highlights the importance of a sound working relation-ship between the stakeholders involved in the practice of quantitysurveying.

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Figure 3: Quantity surveying competency model

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ParameterImportance Evidence Gap

% Rank % Rank % Rank

1 Cost 98.5 1 86.1 1 12.5 9

2 Value 98.4 2 85.2 2 13.2 8

3 Quality 98.2 3 73.5 3 24.8 7

4 Time 97.9 4 71.7 4 26.2 6

5 Developmental issues 92.6 9 65.8 5 27.5 5

6 Black economic empowerment 93.4 7 64.4 6 29.0 4

7 Environment 93.3 8 59.9 7 33.4 3

8 Occupant health and safety 95.3 5 59.5 8 35.8 2

9 Construction health and safety 94.4 6 58.5 9 36.0 1

3.8 Client requirementsTable 6 presents the importance of various parameters to clients, theevidence of quantity surveyors’ competency relative thereto, andthe gap between importance and evidence. After re-scaling theordinal data to interval data the means of the importance andevidence of parameters were computed. The means were thenconverted to percentage ratings. All the parameters were aboveaverage importance. It is notable that the traditional project para-meters, namely cost, quality, and time, are ranked within the top four.It is also notable that in all cases the evidence of competency rel-ative to a parameter is lower than the importance of the parameter.Table 6 also indicates the gap between the importance of a para-meter and evidence of competency relative to a parameter. Thelargest gap, or deficiency, is relative to construction health andsafety, which could be attributable to the status afforded thereto intender and contract documentation. The second and third largestgaps are relative to related parameters, namely occupant healthand safety, and the environment.

Table 6: Importance of parameters to clients and evidence ofquantity surveying competency relative thereto

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4. ConclusionsThere is a need for quantity surveying skills in the built environment.

Based upon the predominating competencies in terms of import-ance, it can be concluded that quantity surveyors are perceived tofulfil their traditional role of financial and contractual controller ofprojects — cost control; estimating; measurement (quantities); planreading; economics of construction; professional practice; con-struction contract practice; computer literacy and information tech-nology, and procurement. The results of the PCA, namely the first andsecond ranking of ‘Factor 2: Financial planning and control’, and‘Factor 3: Contract administration’ respectively, reinforce thisconclusion.

The low ranking in terms of importance of the so called new com-petencies such as project management and facilities manage-ment, namely 21st and 31st respectively, lead to the conclusion thatclients do not perceive these to be the functions of quantitysurveyors.

The evidence of competencies in the form of the percentagedeficiency relative to the importance of parameters according toclients reinforces the conclusion that quantity surveyors still fulfil thetraditional role of financial and contractual controller of projects.However, it can also be concluded that quantity surveyors aredeficient in terms of competencies relative to the other parameters,in particular health and safety, and the environment, but alsodevelopmental, time, and quality.

5. RecommendationsIt is recommended that tertiary institutions, the SACQSP, and theASAQS should address the perceived deficiency relative to thecompetencies identified by the gap analysis, particularly those com-petencies that achieved evidence percentage scores below that ofthe overall average evidence percentage score. This recom-mendation requires interventions during curricula design, accredit-ation, assessment of professional competency, and continuingprofessional development.

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ReferencesCattell, R.B. 1966. The scree test for the number of factors. MultivariateBehavior Research, 1, p. 245-276.

Cattell, R.B. & Jaspers, J. 1967. A general plasmode (No. 30-10-5-2) forfactor analytic exercises and research, Multivariate BehavioralResearch Monographs, 67(3), p. 1-212.

Construction Industry Development Board (CIDB). 2004. SAConstruction Industry Status Report. Brooklyn: CIDB.

Crafford, G. J. 2002. The design team’s views on quantity surveyingcompetencies, Unpublished MSc (QS) Dissertation. South Africa. PortElizabeth: University of Port Elizabeth.

Cropley, D. H. & Harris, M. B. 2004. Too Hard, Too Soft, JustRight…Goldilocks and Three Research Paradigms. In: SE, SystemsEngineering, managing complexity and change. Proceedings of 14thAnnual International Symposium, Toulouse, France, 20-24 June.

Jolliffe, I.T. 1972. Discarding variables in a principal componentanalysis, I: Artificial data. Applied Statistics, 21(2), p. 160-173.

Kaiser, H.F. 1960. The application of electronic computers to factoranalysis. Educational and Psychological Measurement, 20, p. 141-151.

Krejcie, R.V. & Morgan, D.W. 1970. Determining sample size forresearch activities. Educational & Psychological Measurement, 30(3),p. 607-610.

Leedy, P D. & Ormond, J.E. 2005. Practical research: Planning anddesign. 8th ed. New Jersey: Prentice Hall.

Leveson, R. 1996. Can professionals be multi-skilled? PeopleManagement, 2(17), p. 36-39, August.

Male, S. 1990. Professional authority, power and emerging forms of‘profession’ in quantity surveying. Construction Management andEconomics, 8(2), p. 191-204.

Nkado, R.N. 1999. Competencies required of Quantity Surveyors.Unpublished MBA Treatise, South Africa. Johannesburg: University ofthe Witwatersrand.

Nkado, R. N. & Meyer, T. 2001. Competencies of professional quantitysurveyors: A South African perspective. Construction Managementand Economics, 19(5), p. 481-491.

Royal Institute of Charted Surveyors (RICS) 2006. Guide for supervisors,counsellors and employers — graduate route to membership.London: RICS.

Robbins, S. P. 1998. Organizational behavior. 8th ed. New Jersey:Prentice-Hall.

Seeley, I. H. 1997. Quantity Surveying Practice. 2nd ed. London: TheMacmillan Press Ltd.

Zikmund, W.G. 1994. Business Research Method. New York: The DrydenPress.

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Andre Bester & Theo Haupt

The role of the CEO in the performance ofconstruction Information Systems (IS): APilot Study.

Peer reviewedAbstractThe purpose of the study is to examine the relationship between constructionInformation Systems (IS) performance and the involvement of the CEO.The information provided in this article is based on a knowledge, attitude andperception (KAP) study that included a literature review and self-administeredquestionnaires with a small sample of CEOs of construction companies.This study suggests that the performance of information systems in constructionfirms can be linked to the governance role played by CEOs. Other studiesreported in the literature suggest a similar linkage, the reality is that in practiceIS in the construction sector is underutilised and performs poorly. Similarsentiments have been expressed in the literature. One of the main reasons forIS poor performance has been found to be the lack of executive support andinvolvement stemming from resistance from executive management. Further,despite the use of IS in construction companies, very few, if any have astrategic plan in place for IS in their organisations.This article contributes to increased understanding of the importance ofinformation systems in the construction sector, and the relationship between ISperformance and CEO commitment and involvement. Keywords: Information Systems, IS Governance, CEO, CIO

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Andre Bester, Cape Peninsula University of Technology, Bellville, Cape Town,South Africa. Tel: 021 9596028 or mobile: 082 2020 674

Dr Theo C. Haupt, Research Coordinator: Faculty of Engineering and Coordinator& Lead Researcher: Southern African Built Environment Research Center (Bellville)Faculty of Engineering, PO Box 1906, Bellville, 7535, Tel: 021 959 6845, E-mail:<[email protected]>

AbstrakDie doel van die artikel is om the verhouding tussen konstruksie Inligtingstelsels(IS) en die betrokkenheid van die uitvoerende bestuurder van ’n maatskappyte ondersoek. Die inligting in hierdie artikel is baseer op ’n kennis, houding en perseptuelestudie wat onder andere ’n literatuurstudie en selfsaamgestelde vraelyste(versprei onder ’n klein groepie uitvoerende bestuurders van konstruksiemaatskappye) insluit.Die studie het bevind dat die werksaamhede van inligtingstelses inkonstruksiemaatskappye direk verbind kan word aan die rol wat uitvoerendebestuurders van hierdie maatskappye speel. Inligtingsbronne bestudeer virhierdie studie het dieselfde bevind. Die realiteit is dat inligtingstelsels in praktykonderbenut en swak gebruik word. Een hoofrede hiervoor is dat bestuurdersvan maatskappye nie die gebruik van (IS) ondersteun nie. Min bestuurders het’n strategiese plan in plek vir die gebruik van (IS) in konstruksiemaatskappye.Hierdie artikel poog om die begrip vir die belangrikheid van inligtingstelsels indie konstruksiesektor en die verhouding tussen IS werksaamhede en uitvoer-ende bestuurders’ se toegewydheid en betrokkeheid te verbeter.Sleutelwoorde: Inligtingstelsels, IS bestuur, Uitvoerende bestuurders

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Bester & Haupt • The role of the CEO in construction Information Systems

1. IntroductionWe [construction sector] will have to apply sophisticated technologyin doing our work and to understand what our client industries need... To develop engineering packages and give our clients a totalservice, that is the key ... Be flexible, stay at the leading edge. Forthose who adapt to meet the changes the future is brightCordel Hull, Executive Vice President of Bechtel (Betts, 1999: 7)

Construction is an increasingly dynamic sector that needs tothink differently about how it does business given the highlycompetitive and changing environment in which it operates.

This dynamic environment is increasingly influenced by economic,technological and social factors (Betts, 1999). However, theconstruction sector is reputedly lethargic to adopt innovation and, inparticular, new technology. Arguably it has not readily embracedInformation Technology (IT) given its reluctance to recognise themany potential efficiencies and competitive advantages affordedby this technology, specifically the impact of Information Systems (IS)on organisations.

Information is becoming a key competitive resource that is critical tobusiness performance (Betts,1999; Moody & Walsh, 1999). The suc-cessful completion of construction projects depends on the ac-curacy, effectiveness and timing of the exchange of informationbetween the project team members, a function easily managedwith an information system (Rono & Arif, 2004). The ConstructionIndustry Development Board (CIDB) in South Africa reported that onlyhalf of all construction projects had been completed on time, andwithin budget (CIDB, 2004). Arguably, there is still a fear in theconstruction sector that investment in IS is risky with the possibility ofbacking the wrong technology or standards, and constantly havingto keep the IS investment up to date (Betts, 1999). Furthermore, pastfailure to deliver the benefits promised by IS coupled with ongoingdifficulty in quantifying the return on investment has possibly alsocontributed to the reluctance within the construction sector to investin IS. It is likely that the way IS is allowed to be managed presents as amajor problem, and therefore, it needs attention and improvement(Stewart, 2002). Most companies manage IS through a decentralisedstructure, with IS typically used by IS specialists for discrete appli-cations that are only used by staff at technical levels (Betts, 1999).Strategic IS implementation is important in the context of issues, suchas organisational structure, management style and human resourcepolicy. Chief Information Officers (CIOs) in construction companiestypically do not participate in the formulation of business strategy(Betts, 1999).

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Many construction organisations appear to approach the manage-ment of IS in an unstructured or ad hoc manner (Stewart, 2002). Theuneasy relationship between executive construction managementand IS emanates from a perception by management that IShistorically fails to deliver the expected benefits (Betts, 1999). Becauseof their lack of system knowledge and understanding, executivemanagement is reluctant to support IS (Tucker & Mohamed, 1996).The factors that inhibit the adoption of IS in construction include:

• Resistance from [executive] management;

• Tight profit margins;

• Lack of IS/IT awareness;

• Lack of employee education and training;

• Degree of required organisational change; and

• A belief that the industry is doing well without IS/IT (Stewart,2002).

The literature suggests ambiguity about the perceived strategic roleof IS in the construction sector and its implementation in practice. Amulti-national, cross-sector study found that the construction sectordid not necessarily lag behind other industrial sectors in its imple-mentation of IS (Clark et al., 1999). A study by the Council for Scientificand Industrial Research (CSIR) in 2002 suggested that South Africanconstruction companies were in line with their international peers withregard to IT implementation. Further, the study reported that SouthAfrican construction companies value IT as a key enabler in theirbusinesses and regarded IT as critical for their international com-petitiveness (CSIR, 2002). A survey carried out in the Western CapeProvince of South Africa revealed that most architectural practiceshad accommodated IS in their operations. The study also found thatIS played a key part in the execution of building projects in theGauteng Province. Many construction companies had benefitedfrom the strategic opportunity offered by IS (Rone & Arif, 2004).Despite intensive use of IS in construction companies, none of thecase studies revealed an explicit plan for IS use (Betts, 1999).

2. Role of the CEOUntil recently CEOs were able to survive even when they avoidedanything related to IS, leaving IS leadership to others in theorganisation (Buuron, 2002). This attitude of CEOs towards IS govern-ance resulted in large scale IS failure during the 1990s, and CEOs

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paying the price. CEOs needed to become IS ‘believers’ to supportbusiness strategy and achieve superior performance (Buuron, 2002).According to Earl & Feeny (2000) nearly every strategic issue thatbusinesses are being confronted with are triggered by IS. CEOs can,therefore, neither avoid IS nor delegate the issues it raises to others.Organisations were less likely to make IS strategic investments whenthe IS perspective was not integrated into executive management(Jenks & Dooley, 2000). Furthermore, it is found that if there waslimited dialogue and mutual understanding between the CIO andCEO, the CEO was less likely to view IS as strategically important(Johnson & Lederer, 2003).

Earl & Feeny (2000) suggest five important roles for CEOs in steering ISin the organisation, namely:

• Creating Context — CEOs must create a context of positivehunger for change, empower IS to successfully exploit newways of doing things and venture into the unknown;

• Setting Priorities — CEOs should highlight a small set ofbusiness priorities the importance of which they consistentlyreinforce;

• Signalling Continuously — and Positively — The beliefs ofCEOs are not private, and therefore their speeches, docu-ments, comments, meetings and daily interactions impacton the whole organisation;

• Spending Quality Time — CEOs must take their IS leadershipseriously and invest quality time with IS matters and keep ISon their agenda; and

• Working Closely with the CIO — CEOs must create anorganisational structure to enhance the working relationshipwith the CIO, in terms of which they build a two-wayrelationship in which the CEO can challenge or question ISthinking as well as provide business direction for IS.

Additionally, Callahan & Nemec (1999) prescribe four key initiativesfor CEOs for driving IS forward, namely:

• Make IS a key part of the CEO agenda;

• Manage for value creation;

• Manage IS spending and investment priorities in line withcorporations overall investment priorities; and

• Deploy the best IS management model.

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Given that the CIO adds value to the organisation it is important for aCEO to capitalise on this value-adding characteristic through:

• Positioning IS and the CIO as agents of change;

• Focusing on achieving effectiveness, not efficiency fromIS;

• Institutionalising business value for IS; and

• Building an executive team that includes the CIO (Delisi,Danielson & Posner, 1998).

Given that Earl et al. (2000) it is important for CEOs living in theinformation age to understand the need of new technologiesimposed by IS. They need to continuously possess a vision of thefuture and use IS to analyse it. CEOs need to sponsor IS architecturethrough close engagement with IS technologists, ensure IS archi-tecture standards are respected across the business and establishthe necessary funding for maintenance and upgrades. The CEOensures that IS is embedded in the company by the ways that ISstrategies are created, potential IS investment is evaluated andsanctioned, and projects to implement approved investment plansare set and governed. CEOs need to challenge the supply side of IS,in particular, sourcing and capabilities.

CEOs need to understand IS and how they can make optimal use ofIS to achieve organisational goals. Although IS activity is highlytechnical and complex, top management can provide adequateguidance without detailed technical knowledge (Doll, 1985; Callahanet al., 1999). Therefore, the problems of designing and implementingcompany-wide IS are primarily managerial rather than technical. Therole of the CEO in IS/IT planning and development should typicallybe:

• Measure the business value of the IT by quantifying itsoverall economic value to the business;

• Recentralise control of IT spending while maintainingflexibility;

• Communicate the results one expects in understandablefinancial terms;

• Keep the IT architecture/infrastructure simple;

• Insist on rigorous pilot testing;

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• Ensure that the new system has the capacity to handlethe required number of transactions that need to beprocessed;

• Closely monitor what IT suppliers are using to run their ownbusinesses; and

• Avoid succumbing to hasty decisions based on theurgency of the situation.

Bennis & O’Toole (2000) note that the right CEO can make or break acompany, in part because of the CEO’s role in initiating and leadingplanned change.

3. Organisational Structure for ISThe environment plays an important role in which the organisationoperates, and clearly reflects the different forms of organisationalstructures used. Organisations need to design a structure that willsupport IS to process information more effectively and efficiently(Dibrell, 2002). According to Karake (1992; 1994) the dynamic changesin IT and its related technologies has a profound effect on people,processes, structures and strategies of organisations. Technology andcommunications improvements and accessibility lead to systemscentralisation of the business processes, and the growing reliance onintegrated systems.

Two forms of organisations, namely mechanistic and organic, exist:• Organic form — knowledge and control of task is located

anywhere in the organisation. Communication is predom-inately horizontal. There is a weak hierarchy of authorityand control with few rules. Employees contribute to thecommon task of their department. Tasks are adjusted andredefined through employee’s interaction.

• Mechanistic form — knowledge and control of tasks arecentralised at the top of the organisation. Communi-cation is predominately vertical. There is strong hierarchyof authority and control with many rules. Tasks are brokendown into specialised separated tasks (Galbraith, 1977;Brown & Magill, 1994).

Most organisations and businesses struggle with how to deploy IS tosupport strategic objectives and goals. One of the solutions to thisproblem is the way [de]centralisation is implemented by the organ-isation. Figure 1 illustrates the situational dilemma organisations havein structuring IS. Executive management needs to decide which willbest suit the organisation.

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Figure 1: Two Dimensions: Situational Factors Determining IS in the OrganisationSource: (Adapted from Tan, 1994)

From Figure 1 it is evident that situational factors influence thestructuring of IS for the organisation. The following contingencyvariables influence the position of IS in the organisation:

• The structure of the organisation;

• The culture of the organisation;

• The importance of IS for the company;

• The current phase of IS in the company; and

• The extent of automation inheritance.The importance of IS for a company depends on how companiesvalue the current and future IS. In Table 1 the importance of IS for acompany can be measured through suggests the use of a simple grid.

Table 1: Strategic grid to determine importance of IS Importance of future IS

HIGH LOW

Importance ofcurrent IS

HIGH Operational Strategic

LOW Supportive Transforming

Source: (Adapted from Tan,1994)

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Figure 2: Five Organisational Structures for IS Source: (Adapted from Tan (1994))

Centralised IS

All IS functions are control-led by CIS located attop management level.Application developmentand resources are usuallyprovided on a project-by-project basis, and are notdedicated to specific BU.

Central co-ordinated IS

CIS set and control theIS standards throughout.DIS situated at BU level,but report to CIS. ISresources are shared atboth CIS and DIS. IS tasksare delegated to DISthrough the BU.

Functional co-ordinated IS

CIS set and control thestandards, DIS report tothe BU managers, have afuncional relationship withCentral IS. BU determinesthe “what” and DIS the“how”. Selective decen-tralisation is controlledfrom the top down.

Federated IS

CIS co-ordinating standards,projects and participate in a“steering committee” run by topmanagement, but share amutual responsibility towardsstandards, combined projectsand distribution of tasks.Selective decentralisationcontrolled from the bottom up.

Decentralised IS

IS functions and controlare totally decentralisedto the business unit (BU)level, each setting ownstandards and control IS.

The circles indicate the location of Information Systems (IS) in relationship to theorganisational structure of the company. = Central IS (CIS). = decentralisedfunction of IS (DIS). BU = Business Units. FD = Functional Departments

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When the importance of the current and future IS is low, then IS willonly play a supportive role and receive little attention from executivemanagement. However, IS are of operational importance when thecurrent functioning of the organisation dependent on IS, but relativefew developments are expected in the future. When the current IShas an expected supportive role and is vitally important to thesurvival of the organisation, IS plays a transforming role.

As seen from Figure 2 there are five possible organisational forms forstructuring IS within the organisation. The two most extreme structures forIS are normally total Centralised IS opposed to Decentralised IS functions.

Centralised IS relies on a governance structure where informationmanagement reports up through a single chain of command.Decentralised IT, on the other hand, distributes management of ISthrough a multitude of functional and regional commands (Ulrich,2004). Studies also show that most IS organisations utilize either acentralised (45%) or combination (hybrid) of centralised and de-centralised (48%) governance structures.

Arguably, centralised IS and decentralised IS can coexist and flourishunder the same governance structure.

Centralised and decentralised and other different hybrid configur-ations of IS can flourish towards collaborative, adaptive governance(Ulrich, 2003). In the past the function of IS was primarily related todata processing. However, these days IS plays a central role in com-petitive strategies. Consequently, business management has a criticalrole to play. While IS can deliver the technology, the benefits andvalue from this technology must be unlocked — a business manage-ment function. According to Gottschalk & Taylor (2000)

“Chief Information Officers (CIO) have the difficult task of running afunction that uses a lot of resources but delivers little evidence of itsvalue. To respond to business and technological changes, CIOs nowmust build relationships with line managers [and executives’] “

4. Research methodsThe use of a suitable research methodological approach is neces-sary to achieve the objectives of any study. Hussey & Hussey (1997:54) suggest that “Methodology refers to the overall approach of theresearch process, from the theoretical underpinning to the collectionand analysis of data.” This section describes the research design usedto achieve the objectives of this particular study.

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Having taken cognisance of the questionnaire design process, it wasdecided that e-mail or self-administered questionnaires would be themost appropriate survey instrument to use in this study. Questionspertaining to the research were developed using a grid proposed byFrazer & Lawley (2000) as shown in Table 2.

Table 2: Links between stages of research processQuestionnaire designResearch Problem:Research Question/s:

InvestigativeQuestions

Researchobjectives

Relevantquestions forquestionnaire

Level ofdata

Proposed analysistechnique used

IQ1 RO1 Q1

NominalRatioOrdinalInterval

Frequencies andpercentages, thenappropriate measures ofcentral tendencyFrequencies, means andstandard deviations, thent-test to establishsignificant differences, orappropriate bivarate tests.

Considering that there could be a wide range of expected or pos-sible responses, questions that were open-ended were kept to aminimum. Where they were included, respondents had the freedomto fully explain their choice of response. For most of the questions a 5-point Likert scale was deemed appropriate and scaled responseswere developed. The questionnaire was divided into 5 sections,namely, demographic information, organisational design, IS govern-ance, management of IS, and information and knowledge manage-ment. This questionnaire was designed to be completed by CEOs ofconstruction companies. For the purpose of this paper two sectionsof the survey will be highlighted, namely:

• Organisational Design that addresses IS governance in theconstruction company. The aim of this section was toestablish the importance of IS for the CEO in terms of ISstrategy, IS on the CEO’s agenda, IS investment, importanceof IS output, and importance of a CIO/CEO relationship; and

• IS governance that examines CEOs of constructioncompanies, and their role in organisational design. The aimof this section was to establish to what extent the CEO of aparticular company is involved in the structuring of the

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Statement SD TD U TA SA Mean Std.Deviation

The CEO makes all majorstrategic decisions alone ortogether with a group of seniorexecutives.

N 0 0 01 4 4

4.44 0.527% 0 0 0 44.4 55.6

% 0 11.1 11.1 22.2 55.6

The management structure ofmy company is flat, uses cross-hierarchical and crossfunctional teams, has lowformalisation, possesses acomprehensive informationnetwork, and relies onparticipative decision-making

N 1 1 0 7 0

3.44 1.13% 11.1 11.1 0 77.8 0

% 11.1 55.6 0 33.3 0

company, and more specifically how IS is structured to playa strategic role in the company. Respondents were alsorequested to indicate which structural form best describedIS in their company.

CEOs were asked to respond to questions on a 5-point Likert scaleranging from ‘strongly disagree’ to ‘strongly agree.’ CEOs were alsorequested to add additional comments if they wished to clarify theirresponses.

5. FindingsIn order to draw conclusions from the empirical data collected,statistical evidence is necessary to establish the existence andstrength of the relationships between the variables represented bythe data. The Statistical Package for Social Sciences (SPSS) was usedto analyse the data from the survey instrument. The findings of thequestionnaire as well as the analyses of the findings are as follows:

5.1 Organisational DesignTable 3 suggests that in most companies the CEO either alone, orwith an executive management team, made all the major decisions.Most companies regarded themselves as well established, large andserving different markets. Fewer companies reported that theirmanagement structures were flat, used cross-hierarchical and cross-functional teams, had low formalisation, possessed a comprehensiveinformation network, and relied on participative decision-making.

Table 3: Hierarchy of authority

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The results in Table 6 suggest that the companies of most CEOs arecharacterised by a flexible reporting structure in terms of whichsubordinate staff report to different managers, depending on theproject or the location of the work. Several companies regarded

Table 4: Importance of IS in Organisational Design Process


I inherited theexistingorganisationalstructure and madechanges that Ideemed necessary

N 1 1 0 2 4

3.88 1.55% 12.5% 12.5% 0 25% 50%

% 77.8% 22.2 0 0 0

From Table 4 it is evident that most CEOs agree that the constructionprocess is highly dependent upon both the transfer of informationand the exchange of information between all levels of theorganisation. Further, that IS is supported by the organisationalstructure of the company. CEOs also consider IS to be critical to theprocess of [re]structuring their companies towards more effectivelean and flat management structures.

Table 5 suggests that most CEOs inherited the existing organisationalstructure and made changes that they considered necessary, whileall CEOs were involved in developing the organogram or organis-ational structure of their companies.

Table 5: Extent of CEO involvement in organisational development


Given that the constructionprocess is highly dependentupon the transfer ofinformation and the exchangeof information between alllevels of the organisation [IS] issupported by theorganisational structure of thecompany

N 0 0 0 5 3

4.38 0.52

% 0 0 0 62.5 37.5

‘Information systems’ areconsidered to be critical to theprocess of [re]structuring mycompany towards a moreeffective lean and flatmanagement structure

N 1 3 1 2 2

3.11 1.45% 11.1 33.3 11.1 22.2 22.2

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themselves as being well established, highly specialised and formal-ised in terms of work, with decision-making usually concentrated attop management level. Fewer companies regarded themselves asyoung organisations serving a highly technical environment withdecision-making spread throughout the organisation with powerresiding in the experts. Even fewer indicated that they weretemporary alliances between two or more organisations, groupedtogether to accomplish a specific venture, but were still formallystructured.

Table 6: Importance of structural forms in the Organisation


My company is characterisedby a flexible reporting structurein terms of which subordinatestaff report to differentmanagers, depending on theproject or the location of thework

N 0 0 2 5 2

4.00 0.71

% 0 0 22.2 55.6 22.2

My company is characterisedas well established, work ishighly specialised andformalised and decisionmaking usually concentratedat top management level

N 0 2 2 3 1

3.38 1.06

% 25 25 0 37.5 12.5

My company is regarded as ayoung organisation in a highlytechnical environment withdecision making spreadthroughout the organisationwhile power resides in experts

N 1 4 0 4 0

2.78 1.20

% 11.1 44.4 0 44.4 0

My company is characterisedas simple with littlespecialisation or formalisation;Consequently, power anddecision-making are vested inthe chief executive.

N 4 2 0 2 0

2.00 1.31

% 50 25 0 25 0

Company is a temporaryalliance between two or moreorganisations that bandtogether to accomplish aspecific venture, but is stillformally structured.

N 7 1 1

1.67 1.41

% 77.8 11.1 11.1

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5.2 Information Systems GovernanceTable 7 suggests that to most CEOs IS investment is an important partof their business strategy. Slightly fewer CEOs consider IS as a strategicasset, and still fewer have a formal IS strategy for their companies. Tothe least number of CEOs it was not important to have an IS strategyon the company’s strategic agenda.

From Figure 3 it is evident that the most popular organisational structurefor IS is Centralised IS (CIS). A Decentralised IS (DIS) organisationalstructure is less common, while Centralised Coordinated IS (CCIS),Functional Coordinated IS (FCIS), and Federated IS (FIS) are the leastpopular in terms of organisational structure.

Figure 3: Structure forms for IS

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Table 7: Importance of IS strategy for the organisation


Information systems support allmanagerial levels in myorganisation( strategicmanagement, tacticalmanagement, operationalmanagement)

N 0 0 1 4 3

4.25 0.71

% 0 0 12.5% 50% 37.5%

IS has become critical to lowerproduction cost, reduce timeto complete projects, addvalue to the constructionprocess and interact withclients and suppliers

N 0 1 1 4 3

4.00 1.00

% 11.1% 11.1% 44.4% 33.3%

Table 8 suggests that most companies IS supports all manageriallevels of the organisation, while in slightly fewer companies IS as avaluable tool is less important for lowering costs through all levels ofthe company.

Table 8: Importance of IS supporting operational processes of theorganisation


IS investment must be key partof the business strategy inorder to build a competitiveadvantage

N 1 1 0 3 44.11 1.05

% 11.1% 11.1% 0 33.3% 44.4%

Information Systems (IS) is acrucial part of the strategicassets of the business in termsof its long-term strategy, dailyperformance, andsustainability

N 0 1 0 6 2

4.00 0.87

% 0 11.1% 0 66.7% 22.2%

My company has an ISstrategy? (An agreement onthe goals of the company forits use of IS and the means ofachieving these goals)

N 0 1 1 6 1

3.97 0.83% 0 11.1% 11.1% 66.7% 11.1%

% 0 22.2% 22.2% 33.3% 22.2%

My company executiveboard makes provision for thediscussion of company wide ISstrategy at its meetings

N 1 2 0 5 13.33 1.32

% 11.1% 22.2% 0 55.6% 11.1%

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The findings in Table 9 indicate that in most companies IS plays animportant role in reacting to changing environments, while in slightlyfewer companies IS has become the primary vehicle for creatingnew advantages, and warding off competitors.

From Table 10 it is evident that in most companies IS is on the CEO’sagenda, while in fewer companies the involvement of the CEO in ISstrategic and project meetings is less important.

Table 10: Importance of CEO support of IS functions


IS must be on the CEO’sagenda because so manyhigh-priority agenda itemsrely on it for delivery andexecution

N 1 2 0 3 3

3.56 1.51

% 11.1% 22.2% 0 33.3% 33.3%

It is important for the CEO toattend IS project meetings,and be involved ininformation requirementanalysis, participate andreview recommendationsand decision-making, andmonitor IS project progress

N 2 2 1 3 1

2.89 1.45

% 22.2% 22.2% 11.1% 33.3% 11.1%

Table 9: Importance of IS supporting organisation sustainability


IS plays an important role inthe efforts of my company tobe more efficient andeffective in reacting tochanging environments

N 0 0 2 4 2

4.00 0.76

% 0 0 25% 50% 25%

IS has become the primaryvehicle for creating newadvantages and parrying theadvantages of competitors

N 0 3 3 1 2

3.22 1.20

% 0 33.3% 33.3% 11.1% 22.2%

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Table 11: Importance of CEO/CIO relationship in the organisation

Table 11 suggests that in most companies the CIO reports directly tothe CEO, and is a member of the executive management commit-tee. However, in slightly fewer companies their CIOs had the skills tomanage IS themselves. In fewer companies designated persons tookresponsibility for IS, and in some companies CIOs participated instrategic meetings. Furthermore, in even fewer companies thearticulation by the CEO of a clear mission for IS to the CIO is even lessimportant.

The results in Table 12 indicate that to most CEOs it is important for theexecutive management to use IS output for objective verificationand discussion, and for making decisions concerning strategy formul-ation or performance evaluation. In some companies all employeeshad an accurate understanding of the importance of IS output toexecutive management.


The CIO reports directly tome, and is a member of myexecutive managementcommittee.

N 2 3 0 0 33.88 1.25

% 25 37.5% 0 0 37.5%

The CIO has adequateknowledge, business and ISskills for to be able to beresponsible for IS governance

% 0 2 0 2 23.67 1.37

N 0 33.3% 0 33.3% 33.3%

Responsibility for ISperformance is the task of adesignated person such as aCIO

N 0 3 0 4 13.38 1.19

% 0 33.3% 44.4% 11.1%

The CIO always (or whennecessary) attends majorstrategy formulation meetings

% 0 2 0 4 03.33 1.03

N 0 33.3% 0 66.7% 0

I (CEO) articulate a clearmission for the CIO, includingspecific responsibilities for IS/ITthat go above and beyondmanagement of the headoffice IS/IT department

N 0 3 0 2 1

3.17 1.33% 0 50% 33.3% 16.7%

% 50% 50% 0 0 0

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6. ConclusionThe study found that the participating companies had been inexistence for lengthy periods and had experienced CEOs. Authoritywas typically vested in their CEOs and executive management. Theexecutive teams of construction firms participated in the structuring oftheir companies, making changes to the organisational structure asthey deemed necessary. Furthermore, CEOs either made strategicdecisions by themselves or together with other members of theirexecutive team. The study suggests that most construction com-panies had flat management structures and centralised authority andcontrol in the form of the CEO. Most companies had structures basedon a matrix form, which has dual benefits of the levels of technicalexpertise created by functional structure, and flexibility and team-work. The matrix structure is also suitable for construction companieswhich carry out many projects concurrently, all of which need tech-nical expertise and special managerial attention.

Further, evidence of hybrid structures was detected. These findingscorrelate with those of Anumba et al. (2002) who determined in theirstudy that the most common organisational type was the matrixstructure, with the dual benefits of high levels of technical expertisecreated by the functional structure, flexibility and team work. Thepredominating forms of IS structure in the surveyed companies werecentralised and centrally coordinated IS structures. These findings aresupported by the findings of several other studies by Karake (1994);Brown & Magill (1994), Duncan (1997), Burke (2004), Douglas (1999),Hitt et al. (2001), McMillan (2002), Lucey (2005), Tan (1994), Galbraith(1977), Mintzberg (1979), Dibrell (2002), Ulrich (2004) and Peppard &Ward, (1999).


Executive managementuses IS output for objectiveverification and discussion.For example, to makedecisions concerningstrategy formulation orperformance evaluation

N 1 1 3 2 2

3.33 1.32

% 11.1% 11.1% 33.3% 22.2% 22.2%

Employees [staff] at alllevels of my organisationhave an accurateunderstanding of the ISoutput that my executiveteam uses/requires

N 1 2 2 4 0 3.00 1.12

Table 12: The importance of IS output for strategic management

Evidently, most companies consider IS investment to be a strategicasset, and have formal IS strategies in place. Furthermore, most CEOsreported that IS supported all managerial levels of their organisations.They also considered IS to be a tool for lowering construction costs.The findings suggest that in most companies IS assists them to reactand adapt to changing environments while also providing them withcompetitive advantages. Most CEOs surveyed regarded IS as animportant agenda item. Consequently, they remained involved inthe IS strategy and project meetings. The study suggests that CEOsinfluence the performance of IS by their involvement in strategicaspects of IS governance. These findings are supported by thefindings of other studies by Callahan et al. (1999), Ndebe-Amandi(2004), Carr (2003), Yasin & Quigley (1994), Ramakrishna (2002),Buuron (2000), Chan (2000), Daniels (1998), Remenyi (1999), Suwardyet al. (2003), Ragunathan et al. (2002), McMillan (2002), Halachimi(1994), McClearly et al. (1995), Earl & Feeney (2000), Johnson et al.(2003) and Palanisamy (2005).

There is evidence from this study that most CIOs report directly to theCEO while taking full responsibility for IS management and govern-ance. Further, most CIOs had adequate knowledge, business and ISskills to perform their governance functions. CEOs typically articul-ated a clear mission for their CIOs with specific responsibilities. MostCIOs were required to attend major strategy formulation meetings.These findings correlate favorably with studies by Earl et al.(2000),Delisi et al.(1998), Ragunathan et al.(2002), Gottchalk (2000),Yodakawa (2000), Bai & Lee (2003), MITI (1999), Jenks & Dooley(2000), Feeney & Ross (1999), Evans & Hoole (2005).

IS was found to be important in the generation of reports, whichwere, in turn, important for strategic decision-making. There wasconsideration for and appreciation of the kind of informationrequired to support and inform different strategic objectives. MostCEOs reported that their IS gathered and processed data accuratelyand without redundancy.

However, despite the study findings, the reality is that in practice IS inthe construction sector performs poorly. Similar sentiments have beenexpressed in the literature. One of the main reasons for IS poorperformance in the organisation has been found to be the lack ofexecutive support for IS (ITCortex, 2005). Arguably, the lack ofexecutive support for IS typically results from:

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• Resistance from executive management;

• Organisational structure for IS;

• Lack of IS awareness;

• Tight profit margins that inhibit IS investment;

• Lack of IS fusion in the company relative to the alignmentof business practice and performance to the overall ISstrategy; and

• A general belief that the industry is doing well without IS.This problem has been identified by researchers and practitionersas not only a local, but also a world-wide phenomenon. Betts(1999) found that despite the intensive use of IS in constructioncompanies, very few, if any, had a strategic plan in place for IS intheir organisations.

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81

Fanie Buys & Tamari Mavasa

The management of governmentimmovable assetsPeer reviewed

AbstractAsset management involves the management of immovable assets throughout itswhole life cycle. This article presents the findings of research on the challenges facingNational Government on the management of its immovable assets. The researchcontemplates the management of government immovable assets throughout itswhole life cycle, the importance of an asset register as well as an immovable assetmanagement plan. The primary data was collected by means of conductinginterviews with government department personnel to reveal the strengths andweaknesses of the current theories and models within the government departments.Secondary data was obtained from the literature reviewed in relevant publications.The main findings were that the National Department of Public Works (NDPW) iscurrently ineffective in asset life cycle management, there is no clarity on theexistence of an immovable asset management plan and that there is an urgentneed for competent personnel with adequate skills to verify, capture and correctproperty data in an effective asset register.Keywords: asset management, asset register, immovable assets, life cycle

AbstrakBatebestuur behels die bestuur van vaste bates tydens die volle lewenssiklusvan die bate. Hierdie artikel beskryf die resultaat van navorsing oor dieuitdagings van die Nasionale Regering betreffende die bestuur van sy vastebates. Die navorsing beskou die bestuur van bates tydens die vollelewenssiklus-fase, die belangrikheid van ’n bate-register sowel as ’n vaste batebestuursplan. Die primêre data vir die navorsing was verkry deur onderhoudete voer met regeringspersoneel om die sterk- en swakpunte van huidigeteorieë en modelle in die staatsdepartemente te bepaal. Sekondêre data isverkry uit relevante bestaaande literatuur. Die hoofresultate dui aan dat dieNasionale Departement van Openbare Werke oneffektief is in die bestuur vanvaste bates, daar is onduidelikheid oor die werklike bestaan van ’n vaste batebestuursplan en dat daar ’n dringende behoefte bestaan aan bevoegdepersoneel om bates te verifieer, aan te teken en foute reg te stel in ’neffektiewe bate-register. Sleutelwoorde: batebestuur, bate-register, vaste bates, lewenssiklus

Prof. Fanie Buys, Head of Department of Building and Quantity Surveying, NelsonMandela Metropolitan University, P O Box 77000, Port Elizabeth, 6031, SouthAfrica, E-mail: <[email protected]>.

Ms Tamari Mavasa. MSc. student, National Department of Public Works, PrivateBag X65, Pretoria, 0001, South Africa, <E-mail: [email protected]>

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1. Introduction

During the last decade, the concept of asset management,with particular reference to immovable assets, has gainedsupport on a global scale; many countries have embarked on

implementing asset management principles and techniques inrespect of all spheres of government. In the context of government,immovable asset management is defined as: “the plannedalignment of immovable assets with service delivery” (NationalTreasury, 2004). This alignment is achieved by the systematic,integrated and appropriate management of all decision-makingprocesses throughout the useful life of an asset.

The National Department of Public Works (NDPW) is responsible forproviding and managing accommodation, housing, land andinfrastructure needs for all National Departments. Improving immov-able asset management processes and principles can play animportant role in attaining government’s objectives of economicgrowth and employment creation. It also has distinct benefits whichrelate to better service delivery, improved accountability, improvedrisk management and improved financial efficiency. Campbell(1999) stipulates that before an organisation embarks on an improve-ment plan, it should assess the strengths and weaknesses of presentsystems. Today’s manager of public assets faces many challenges inthe management of immovable assets.

The first key component of asset management encompasses theImmovable Asset Management Plan (IAMP) that serves as themanagement tool to guide the planning, acquisition, operation andmaintenance and disposal of assets. Vanier (2000: online) states thatthe IAMP should have a series of underlying principles established athigh-level organisations. The second key component of asset man-agement is the asset register that record the essential data pertainingto the status and condition of all immovable assets. Wilson (1999)argues that it is important that the assets are recorded, numbered,labeled accurately and also highlights the time frame for propertyneeding statutory inspection in the asset register. The third key com-ponent is the performance management system that records vitalinformation pertaining to the performance of immovable assets interms of achieving its strategic goals.

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Buys & Mavasa • The management of government immovable assets

2. The Key Elements of Immovable Asset Management

2.1 Immovable Asset Management PlanThe IAMP aligns service delivery strategies and priorities with theimmovable asset strategies and proposes specific strategies foracquisitions, disposals, leasing, management and maintenance ofimmovable assets, as well as identifies funding solutions and ad-dresses all risk related issues (National Department of Public Works,2003). The National Treasury (2004) states that organisations use theIAMP as instrument to demonstrate how it links service objectivesefficiently and effectively. Planning for immovable assets should beseen in the context of overall asset management practices andpolicies; it must focus the attention and activities of property users onthe opportunity and long-term operational costs of property as aresource, as well as highlight the implications of not planning andoptimising the properties utilised.

Asset strategy should be adjunct to the overall strategy of theorganisation. Brownless (2005) is of the opinion that asset strategyshould be consistent with other policies or strategies, be able toidentify the assets and the state of their required performance, beoptimised and take into account the risk assessment, in particularidentifying critical assets. Wilson (1999) articulates that time is bestspent on development of an asset strategy when there is an ap-preciation of knowledge of the corporate and production ob-jectives, future operational needs of the property, an appreciation ofthe asset plans, an understanding of the property life cycle, knowingthe impact of the latest safety regulations and statutory require-ments, and understanding the objectives of assets. Information, un-derstanding and evaluation need to be explored in the process ofthe development of an asset strategy (Gibson, 2005: online).

2.2 Asset RegisterManagers of immovable assets should at least obtain a databasethat will contain details of all assets of the organisation, and provideinformation about assets needed for financial and operationalmanagement and servicing. French (2005: online) states that assetregisters are records of fixed assets whose value is material, theirfunction is to provide the information about assets needed for theirfinancial management, operational management and servicing tosupport immovable assets as shown in the balance sheets. The

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assessment and updating of information in the asset register will makethe management processes more simple, effective, and easy tomanage. Training is crucial to the managers of the asset register.Mather (2005) argues that in order to determine what strategic assetmanagement is required, the organisation should analyse the existingcomponent capabilities, skills and capacities.

2.3 Performance Management SystemAs assets age, their performance or the level of service provided,deteriorates. Immovable assets’ performance needs to be predictedwhen their ability to meet service standards drop to an unaccept-able level. The performance management system assesses the ef-fectiveness of operational, maintenance and capital works pro-grams. The National Treasury (2004) states that the primary tool formonitoring and evaluating the degree to which immovable assetscontributes to realising the objectives of the organisation is throughthe implementation of a performance management system.

3. Research methodResearch was conducted by the Nelson Mandela MetropolitanUniversity to assess the management of immovable assets withinSouth African government departments. The National Department ofPublic Works was targeted as a potential organisation to participatein this study. Leedy & Ormrod (2005) state that research is a viableapproach to a problem only when there are data to support it.Interviews were conducted to reveal the strengths and weaknessesof the current theories and models within the NDPW.

A random sample of twenty staff members was drawn from all levelsof the hierarchy to help ensure an unbiased sample population.According to Patten (2004: online), the larger the sample size, thegreater the probability the sample will reflect the general population.A target population of twenty was deemed sufficient for research ofthis nature. Patten also identifies an unbiased sample as one in whichevery member of a population has an equal opportunity of beingselected in the sample.

4. Survey resultsOf the target population of twenty staff members, only eighteenwere interviewed as the remaining two persons were not accessibleduring the interview time frame. The responses to various questions

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were noted on a spreadsheet during the session with each of theinterviewees after which the results were summarised in table formatindicating number of respondents and ratings.

4.1 Definition of asset managementRespondents were requested to state to what extent they agreedwith a given definition of asset management to determine theirknowledge of asset management, namely “Asset management is abusiness discipline for managing the life cycle of infrastructure assetsto achieve a desired service level while mitigating risk.” The results inTable 1 indicate that 11.1% of the interviewees partially agreed withthe definition. The majority (88.9%) of the respondents indicated thatthey either ‘Agree’ (27.8%) or ‘Strongly agree’ (61.1%) with thedefinition. The average rating of 4.50 is very positive, as it indicatesthat the majority of respondents have a good understanding of theconcept of asset management.

Table 1: Definition of Asset Management

Responses: Do notknow

Rating1=Strongly disagree 5=Strongly agree

1 2 3 4 5 TotalNumber ofrespondents 0 0 0 2 5 11 18

Percentage of total 0 0.0 0.0 11.1 27.8 61.1 100

Average rating 4.50

4.2 Importance and effectiveness of Asset Management

Table 2: Importance of Asset Management throughout its Life Cycle

Responses:Rating

1=Not important 5=Extremely important1 2 3 4 5 Total

Number ofrespondents 0 0 1 1 16 18

Percentage of total 0.0 0.0 5.6 5.6 88.9 100

Average rating 4.83

The results in Table 2 indicate that 5.6% of the interviewees weredoubtful whether it is important for an organisation to manage assetsthroughout its life cycle. The majority (94.2%) of the respondents

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indicated that the life cycle management of assets is either‘Important’ (5.6%) or ‘Extremely important’ (88.9%). The averagerating of 4.83 (Extremely important) is very positive, as the keyelement of asset management operates within a life cycleframework.

Responses:Do notknow

Rating1=Very ineffective 5=Very effective


Percentage of total 0 16.7 33.3 38.9 0.0 11.1 100

Average rating 2.56

Table 3: Effectiveness of Asset Life Cycle Management in the NDPW

The results in Table 3 indicate that half the interviewees indicated thatasset life cycle management is either ‘Very ineffective’ (16.7%) or‘Ineffective’ (33.3), whilst 38.9% indicated neutral. The remaining11.1% of respondents indicated that the organisation is very effectivein asset life cycle management. The average rating of 2.56, which isbelow ‘Neutral’, indicates that there are more respondents who areof the opinion that the NDPW is ineffective in asset life cycle thanthose who think it is effective. Asset life cycle management should beeffective in any organisation to ensure that assets are managedproperly.

4.3 Immovable Asset Management PlanThe aim of the Immovable Asset Management Plan (IAMP) is tointegrate the requirement for immovable assets with a wider servicedelivery strategy and to plan for such assets on a longer-term basis.

Responses:Rating




Average rating 4.61

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Table 4: Importance of an Immovable Asset Management Plan

The summary of the results in Table 4 indicates that 5.6% of theinterviewees were neutral in whether an IAMP is important to theorganisation. The majority (88.9%) of the respondents indicated either‘Important’ (11.1%) or ‘Extremely important’ (77.8%). The averagerating of 4.61 is very positive as an IAMP will enable the organisationalpriorities to be delivered.

Responses:Rating

1=Non existent 5=Fully existent1 2 3 4 5 Total

Number of respondents 6 2 1 3 6 18


Average rating 3.06

Table 5: Existence of an Immovable Asset Management Plan

The implementation of an IAMP is a best practice improvementmethodology that provides an asset management framework andimproved guidelines to improve the management of assets in theorganisation. Any organisation that manages assets should developan IAMP that aligns service delivery strategies and priorities with theimmovable asset strategies and that proposes specific strategies foracquisitions, disposals, leasing, management and maintenance ofassets as well as identify funding solutions and address all risk relatedissues. The summary of the results in Table 5 indicate that 44.4% of theinterviewees indicated that the organisation does not have an IAMP,5.6% were neutral and the remaining 50% of the intervieweesindicated that an IAMP does exist to some extent. The average ratingof 3.06 indicates that there is uncertainty amongst respondentswhether an IAMP really exists, or respondents are not well informed.

4.4 Asset RegisterThe asset register is the basis of an asset management informationsystem and it should contain relevant data beyond that required forfinancial reporting. The results in Table 6 in relation to the definition ofthe asset register indicates that all interviewees agree to some extent

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Responses:Rating

1=Strongly disagree 5=Strongly agree1 2 3 4 5 Total



Average rating 4.72

that an asset register contains all assets, financial and legalinformation of the company’s assets.

Table 6: Definition of Asset Register

The asset register is of strategic importance in the NDPW’s drive toobtain the best functional, social and financial returns from itsproperty portfolio. The summary of the results in Table 7 indicate thatall interviewees agree that the asset register is important to asset

Responses:Rating




Average rating 4.89

managers. This indicates that it is important from a strategic manage-ment, planning, and performance measures perspective that therequired property data is available and correct in the asset register.

Table 7: Importance of Asset Register in Managing Assets

The effectiveness of managing the immovable asset portfolio de-pends on the accuracy and completeness of the asset register. Theresults in Table 8 indicate that only a slight majority (55.5%) of therespondents are of the opinion that the organisation does have anaccurate and complete asset register. The majority of the respond-

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ents avowed that the organisation uses the property managementinformation system as an asset register. The NDPW is, however, facing


Rating1=Very inaccurate _ 5=Very accurate

1 2 3 4 5 TotalNumber ofrespondents 2 5 0 1 8 2 16Percentage oftotal 11.1 27.8 0.0 5.6 44.4 11.1 100

Average rating 3.13

a huge challenge in completing the asset register as there is a lack ofcompetent personnel with adequate skills within the organisation toresearch, verify, capture and correct property data. This is the main


Rating1=Never, 2=Every five years, 3=Annually,

4=Quarterly, 5=Monthly1 2 3 4 5 Total

Number ofrespondents 5 7 0 3 2 1 18Percentage oftotal 27.8 38.9 0.0 16.1 11.1 5.6 100

Average rating 2.23

reason why maintenance to property is neglected and sharing ofinformation contained in the asset register is lacking.

Table 8: Accuracy and completeness of Asset ManagementSoftware

4.5 Performance measures for immovable asset

Table 9: Frequency of monitoring asset performance

The summary of the results in Table 9 indicate that 32.8% of theinterviewees indicated that the performance of assets are eithermonitored ‘Annually’ (16.1%), ‘Quarterly’ (11.1%) or ‘Monthly’ (5.6%).The average rating of 2.23 indicates approximately every two years.It is, however, quite disturbing to note that 27.8% of the intervieweesdo not know how often the organisation measures the performance

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of its assets, while almost 40% (38.9%) of the interviewees indicatedthat the performance of assets is never monitored.

To determine the performance of assets when monitored, respond-ents were requested to indicate the level of performance. Table 10indicates that 16.7% of the interviewees do not know how well the


Rating1=Very dissatisfactory 5=Very satisfactory


Percentage of total 16.7 38.9 0.0 27.8 16.7 0.0 100

Average rating 2.27

organisational assets are performing. 38.9% of the intervieweesindicated that the performance of assets is very dissatisfactory. Theremainder 27.8% of the interviewees was neutral and 16.7% indicatedthat the performance of asset from operational, functional andfinancial perspective is satisfactory. The average rating of 3.27(Dissatisfactory) indicates the negative attitude towards the poorperformance of the government assets. The lack of monitoring andevaluation systems of assets within the department resulted in assetsnot maintained at their optimal value. Over time this has resulted ingovernment’s IA being stripped of their inherent value

Table 10: How well Assets Performs in Organisation

The average rating of 2.27 indicates that most government assets arenot performing well, are deteriorating and need urgent upgrading tomeet the required performance standards.

5. ConclusionThe main objective of the research was to investigate the manage-ment of government immovable assets.

The research results indicated that the majority of the respondentshad a good idea of the scope of asset management and alsoagreed on the importance of asset management. However, thereare more respondents who are of the opinion that the NDPW iscurrently ineffective in asset life cycle management than those whothink it is effective.

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Although the majority of respondents indicated that the presence ofa IAMP is very important for the NDPW, the results indicated that thereis uncertainty amongst respondents whether an IAMP really exists, orrespondents are not well informed.

To have an effective asset management system, an accurate assetregister is needed to obtain the best functional, social and financialreturns from the NDPW’s property portfolio. Although some respond-ents are aware of such an asset register, it seems to be inaccurateand there is an urgent need for competent personnel with adequateskills within the organisation to research, verify, capture and correctproperty data so that it can provide information that meets manage-ment decision-making requirements.

Two-thirds of the respondents indicated that they do not knowwhether the performance of the NDPW’s assets are monitored(27.8%), or indicated that it is not monitored (38.9%) at all. Further-more, almost 40% of respondents indicated that the existing perform-ance of immovable is very dissatisfactory.

A best practice asset management practice relies on the integrationof knowledge, understanding, and experience of how assets cancontribute to business planning, such as acquisition, disposals, work-place strategies and refurbishments. The NDPW should first define itsrole, responsibilities, goals and objectives in terms of its assets. Anasset management framework should be developed and principlesand processes should be put into practice. Planning should be seenas the context of overall asset management practice. The develop-ment of the immovable asset management plan will enable theorganisation to measure performance of assets.

Asset management training and leadership skills are required for assetmanagers at all levels of the organisation and there is a need todevelop programs and activities for all personnel to raise awareness ofasset management as a strategic corporate resource. The effectivemanagement of assets depends on the development of an IAMP,accuracy and completeness of an asset register, and management ofthe immovable asset register throughout its whole life cycle.

ReferencesBrownless, G. 2005. An Asset Management Model for UK RailwaySafety. Literature review and Discussion Document. Harpur Hill: CrownCopyright.

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Campbell, J.D. 1999. Uptime: Strategies for excellence in MaintenanceManagement. Portland: Productivity Press.

French, N. 2005. Asset Register and Asset Rents for Local Authorities: AViable Property Management Tool. [online]. Emerald Group PublishingLimited. Available from: <http://oberon.emeraldinsight.com/vl=4 >[Accessed: 02 July 2006].

Gibson, V. 2005. Strategic Property Management: How can LocalAuthorities Develop a Property Strategy. [online]. Emerald GroupPublishing Limited. Available from: <http://oberon.emeraldinsight.com/vl> [Accessed: 2 July 2005)].

Leedy, P.D. & Ormrod, J.E. 2005. Practical Research. 8th ed. NewJersey: Pearson Education.Mather, D. 2005. The Maintenance Score Card: Creating strategicadvantage. New York: Industrial Press.

National Treasury. 2004. Asset Management: Guidelines forImplementing the New Economic Reporting Format, Learners Guide.Pretoria: Government Printers.

Patten, S.B. 2004. Impact of Antidepressant Treatment on PopulationHealth: Synthesis of Data from Two National Data Sources in Canada.[online]. Population Health Metrics 2004. Available: <http://www.pophealthmetrics.com/content/2/1/9> [Accessed: December 2006].

Vanier, D.J. 2000. Advanced Asset Management: Tools andTechniques, Innovations in Urban Infrastructure. [online]. Seminar ofthe APWA International Public Works Congress. Louisville. U.S.A, PP.39-56, Available from: <http://www.nrc.ca/irc/uir/apwa/apwa00>[Accessed: 17 July 2006].

Wilson, A. (ed.). 1999. Asset Maintenance Management: A guide todeveloping strategy and improving Performance. Oxford: AldenPress.

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Winston Shakantu, John Tookey, Manya Muya & PaulBowen

Beyond Egan’s supply chainmanagement: advancing the role oflogistics in the South African constructionindustry

AbstractThe construction industry has globally been identified by investors andportfolio managers as under-performing in terms of return on investment (ROI),while simultaneously exposing the capital investment of investors to thehighest levels of risk compared to any significant industry. In some cases,construction firms have received rates of return of as low as 1.5 to 2%. This istypically an unsustainable level of return for investors as they can gain aconsiderably higher ROI through much less risky financial vehicles such as giltsand bonds. Given such a low rate of return, the construction industry has for anumber of years attempted to increase efficiency and reduce costs as ameans of winning further business and increasing profitability.One of the methods that have been espoused as offering significant potentialbenefits for construction has been the industry-wide adoption of the principlesof supply chain management (SCM). However, at present the bulk of SCMpractice is focussed on high level strategic issues, whilst largely ignoring moreoperational issues related to logistics. This is a major omission, given the factthat a recent study by the Building Research Establishment (BRE) in the UKindicates that as much as 30% of the cost of construction is attributed totransportation of materials. This article examines, through a review of literature,the role of SCM in construction and the contribution an effective logisticssystem can make to increasing efficiency and reducing construction costs.Keywords: SCM, supply chain management, logistics, process optimisation,construction, transportation

Dr Winston M. Shakantu, Department of Construction Economics andManagement, University of Cape Town, Private Bag, Rondebosch 7701, CapeTown South Africa. Tel: (021) 650 4327; Fax: (021) 689 7564; Email:<[email protected]>

Dr John E. Tookey, Department of Civil and Environmental Engineering, Universityof Auckland, Tel: +64 9 373 7599 Ext 88153; Fax: +64 9 373 7462;[email protected]

Dr Manya Muya, Department of Civil and Environmental Engineering, Universityof Zambia, P.O. Box 32379, Lusaka, Zambia. Tel: +260 1 260 967; Fax: +260 1 260967; [email protected]

Prof. Paul A. Bowen, Department of Construction Economics and Management,University of Cape Town, Private Bag, Rondebosch 7701, Cape Town South Africa.Tel: (021) 650 3445; Fax: (021) 689 7564; Email: <[email protected]>

Oorsigartikels • Review articles

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AbstrakDie bou-industrie word wêreldwyd deur beleggers en portefeuljebestuurdersvereenselwig met die onderprestasie van opbrengs op belegging. Terselfdertydstel dit beleggers se kapitaalbelegging bloot aan die hoogste risikovlakke invergelyking met dié van enige betekenisvolle ander nywerheid. In sommigegevalle verdien konstruksiefirmas opbrengste van slegs 1.5% tot 2%. Vir beleggersis dit ’n onvolhoubare vlak omdat hulle ’n veel hoër opbrengs deur veel laer risikomiddele soos verbande en borgaktes kan verdien. As gevolg van hierdie laeopbrengs het die bou-industrie gepoog om doeltreffendheid te verbeter enkostes te beperk om sodoende verdere besigheid te genereer en winsgewend-heid te verhoog.Een van die metodes wat uitstaan as ’n metode om betekenisvolle voordele virkonstruksie te bied is die industrie-wye aanvaarding van die beginsels vanleweringskettingbestuur. Maar, tans is die omvang van leweringskettingpraktykafgespits op hoëvlak strategiese kwessies terwyl die meer operasionele kwessiesvan logistiek ignoreer word. As in ag geneem word dat ’n resente studie deur dieBuilding Research Establishment (BRE) in die verenigde koninkryk aandui datsoveel as 30% van konstruksiekoste aan vervoer toegeskryf kan word, is hierdie ’ngroot weglating. Hierdie artikel ondersoek die rol van leweringskettingbestuur inkonstruksie en die bydrae wat ’n effektiewe logistieke stelsel kan maak omdoeltreffendheid te verbeter en kostes te sny.Sleutelwoorde: leweringskettingbestuur, logistiek, optimalisering van proses,bou-industrie, vervoer

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Shakantu et al • Advancing the role of logistics in the South Africanconstruction industry

1. Introduction

The construction industry plays an indispensable role both directlyand indirectly in any nations’ economic growth. The industry hasa substantial contribution to make to the quality of life. Its

products, buildings and other structures change the nature, functionand appearance of towns and countryside (DETR, 2000; van Wyk,2004). The construction industry also provides governments in manyparts of the world with economic, regulatory and public sector policyand capacity delivery mechanisms (DETR, 2000; Hillebrandt, 2000;Fellows et al., 2002; van Wyk, 2004). Construction products providethe basis for the property and infrastructure market which generateseconomic opportunities for investors (Cain, 2003).

However, in terms of investment performance, the constructionindustry has for a number of years been identified as one of the poorinvestment sectors in economies around the world (Harvey &Ashworth, 1997; Fellows et al., 2002). The industry has globally beenidentified by investors and portfolio managers as under-performing interms of return on investment (ROI), and simultaneously exposing thecapital of investors to the highest levels of risk in any significantindustry (Harvey & Ashworth, 1997; Fellows et al., 2002). In the UK forexample, construction firms have traditionally received rates of returnof 1.5 to 2% (Macalister, 2003). This is typically an unsustainable levelof return for investors as a significantly higher ROI can be achievedthrough much less risky financial vehicles such as gilts and bonds.Indeed, even in the current economic situation in the UK, whereinterest rates have been low and stable for many years, bank baserates are still in the region of 4% (Bank of England, 2006). Given such alow rate of return, the construction industry has for a number of yearsattempted to increase efficiency and reduce costs as a means ofboth winning further business and increasing profitability (Cartlidge,2002; Cain, 2003).

One of the methods that have been espoused as offering significantpotential benefits for construction is the industry-wide adoption of theprinciples of supply chain management (SCM) (DETR 2000; Cartlidge,2002). Supply chains usually comprise three flows: two directional flowof information between customers and suppliers; one directional flowof materials and products to customers, except where reverselogistics may arise; and the flow of cash from customers to suppliers,designating completed transactions as illustrated in Figure 1.

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Figure 1: The supply chain conceptSource: Muya, 1999

The adoption of SCM principles has become a priority following thepublication of the watershed Egan Report (1998) and Quality of LifeReport published by DETR UK in 2000. These principles have beenechoed around the world. For instance, in Australia, the Common-wealth Department of Industry, Science and Resources (DISR)published a report on best practice supply chain managementtheory and practice. The Report demonstrated through case studieshow companies can improve their performance and competitive-ness (Tucker et al., 2001). In South Africa, the principles of the EganReport (1998) were included in both the 1999 government WhitePaper on Creating an Enabling Environment for Reconstruction,Growth and Development in the Construction Industry and in theConstruction Industry Interim Report (2004).

In the UK, the Egan Report (1998) assumed the role of a banner underwhich government, industry and clients worked together for radicalchange and improvement in construction performance, efficiencyand quality. A central theme of the report was the need to reducewaste at all stages of construction and throughout the supply chain(Cartlidge, 2002; Kelly et al., 2002; Cain, 2003).

However, for the construction industry to benefit from SCM, it isnecessary to understand exactly how the supply chain functions andwhat its components are. To this end, a variety of attempts tounderstand the workings of SCM in the construction industry havebeen made (Agapiou et al., 1998; Formoso & Revelo, 1999; Barker et

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al., 1999; Vrijhoef & Koskela, 2000; Kumaraswamy & Palaneeswaran,2000; Briscoe et al., 2004. On one hand the above works point to thebenefits, functions and components of SCM and on the other hand,the authors also pointed out numerous problems that hinder fullexploitation of SCM in construction. In the work of Voordijk (1999), forexample, it was found that the fragmented organisational structureof the construction industry prohibited development of efficientsupply chain relationships. This fragmented state of the constructionindustry is a direct result of its historical development (Satoh & Morton,1995; Fellows et al., 2002; Morton, 2002; Cain, 2003; Murray &Langford, 2004; Kalidindi & Varghese, 2004).

2. Structure of the construction industryExtensive sub-contracting has led to strategic and operationalfragmentation of the industry as companies become heavily out-sourced and ‘slimmed down’. ‘Slimming down’ in this context can beseen as externalising key skills and disciplines from traditional generalcontractors into sub-contracting organisations but retaining skeletonskills to manage contracts. This significantly reduces the level ofintegration within and between organisations (Gray & Flanagan,1989; Edum-Fotwe et al., 1999).

Moreover, the components manufacturing process occurs off site inspecialist manufacturers’ plant where technical specialisation andmuch of the product knowledge is held (Gray & Flanagan, 1989).Such specialist subcontracting has become a very diverse, frag-mented and complex sector of the construction industry, furtherreducing the level of integration between organisations (Edum-Fotwe et al., 1999).

Regionalisation has also been endemic within the constructionindustry. Reduced main contractor size, increased numbers of sub-contracting organisations, and increasing fragmentation has had asignificant impact on operational capability of contractors. Thegenerally smaller, leaner companies remaining have reducedresources and capitalisation. The reduction in resources has led to alimitation in the scope of operations of small organisations to actlocally or regionally, rather than nationally and globally (Lansley,1987). The reduction in scope of operations forced by a reduced sizecreates two main effects. Firstly, smaller companies start to operatetactically, concentrating on the micro rather than macro view of theworld. This has a significant impact on the inability of a locallyfocused company adopting best practice approaches. Secondly,

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smaller companies move into an economic mindset that emphasisesshort-term expediency, rather than investment in a longer-termintegrative and strategic approach to operations (Edum-Fotwe et al.,1999; CIDB, 2004).

Traditionally the construction industry exhibits other characteristicsdetrimental to taking a longer-term view. The industry is project-based, making the creation of long-term teams very difficult andvirtually unnecessary. Architects and other designers traditionallycreate designs in isolation from the engineers and technicians whoconstruct the industry’s product. This means that constructabilitybecomes a secondary issue compared to the aesthetic qualities ofthe built environment. Although artistically and culturally laudable, itcould be seen as of no benefit to the cost effectiveness and timelydelivery of construction. Recently, these issues have been central tothe problems faced in the construction of the new Scottish Parlia-ment Building in Edinburgh. The problems of massive overspendingand delay led directly to the commissioning of the Fraser Inquiry(Fraser Report, 2004; online).

By extension, components supply is similarly sub-optimal. Thespecified sub-assemblies and components that are required for thetotal construction of a building are selected by the architect on thebasis of architectural merit rather than technical performance (Gray& Flanagan, 1989). Particular lack of understanding is demonstratedby the fact that designers have limited knowledge and experienceof the capability of the companies selected as suppliers. The skills andtools required to select and monitor supplier performance tend to beheld by either quantity surveying or construction managementdisciplines. However, these disciplines have minimal, if any, input intothe design process.

The above characteristics form a unique combination, which re-inforces the preponderance of subcontracting. These key issues havebeen the generic challenges of the industry in the last 200 years andcontinue to-date. Success has been attributed to the cutting of thecost base and externalisation of functions. This has led to a highlyconfrontational approach in the supply chain system of the industry.Stiff competition among the contracting companies has led to lowerprofitability in the industry. Risk is high and many new entrantsbecome bankrupt within the first three years (CIDB, 2004).

In summary, the industry has over the past 200 years developed andmaintained a system of construction with little fundamental change.

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As a result, it has consistently been critiqued for lack of innovation. Forthe past 70 years, the industry’s clients have demandedimprovement. Yet as late as the 1990s and early 2000s, the industrywas found to be underachieving and in need of radical change(Latham, 1994; Egan, 1998; Morton, 2002).

3. Catalyst for radical changeThe Latham Report (1994) proved to be a major catalyst for radicalchange in client attitudes because it put a figure of 30% on the costof inefficiency and waste in the industry. For individual repeat clients,the message about the high level of unnecessary costs was apowerful driver for them to take a more active role in the industry(Cartlidge, 2002; Kelly et al., 2002; Cain, 2003).

The Egan Report (1998) strongly reinforced the concerns of clientsregarding the high levels of inefficiency and waste, and equallystrongly supported the earlier message of the need for integration.The Egan Report differed from earlier reports by urging theadaptation of best practice principles from other sectors of theeconomy, reflecting perhaps, Sir John Egan’s own experiences in theautomotive sector. Egan called for the investigation of totalintegration and management of design development and mostimportantly, construction SCM. It resulted in tools for the systematicand managed approach to the procurement and maintenance ofconstructed facilities based on integrating all the activities of a pre-assembled supply chain under the control of a single point ofresponsibility (Cain 2003; Cavinato, 2005).

The overall goal is to harness the full potential of the supply chain todeliver optimal value to the client while improving the profits earnedby all parties and reducing waste in the system (Kelly et al., 2002;Kalidindi & Vargesse, 2004). These high aspirations assume that lowerlevel operational issues of logistics are well understood and functionefficiently. However, notwithstanding the pivotal role of logisticswithin SCM, at present little work has been done to ascertain thefunctioning of the logistics process in the construction supply chain.

4. The road to improvementAs both a regulator and client of the industry, the South Africangovernment, in line with its U.K counterpart, is actively promoting anefficient and effective construction industry that uses resourcesefficiently, reduces waste and transforms the working environment of

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its people for better employment and greater productivity (CIDB,2004; Van Wyk, 2004).

Notwithstanding the pressure on the industry to reform, constructionremains confined to its old ways of doing business. Risk is regularly andconsistently shifted to others in the supply chain. Typical methodsinclude through non-payment, retention and ‘pay when paid’practices (Ashworth & Hogg, 2002). While most industries haveundergone significant transformations over the past three decades,the South African construction industry presents an obvious andglaring exception to such trends. It is renowned for its inefficiencies aswell as the reluctance of its participants to adopt significantimprovements (CIDB, 2004; van Wyk, 2004).

Surveys undertaken by the South African Council for Scientific andIndustrial Research (CSIR) indicate that clients are not satisfied withthe quality of outputs; and products are too expensive and take toolong to build (Wyk, 2004). The primary cause of the industry’s per-formance weaknesses is the segregation of design and constructionwhich forms a barrier to any consideration of buildability, savings inlabour usage, ease of maintenance and consideration and inclusionof safety at the design stage. The fragmentation reduces theefficiency of the industry and leads to much rework and wastagedownstream (Morton, 2002; CIDB, 2004; van Wyk, 2004). Constructionprojects in South Africa rely on a variety of firms with poorly integratedprofessional and contractor organisations. Each firm performs avariety of wasteful activities within its own discipline. These frag-mented processes create inefficiencies resulting in substantial delaysand costs. South African clients, like their counterparts across theworld, have begun demanding for radical improvements in con-struction performance. Clients’ focus is on the effect construction hason other industries’ performance through its contribution tooverheads.

In contrast to construction, most firms in other industries have strivento improve their competitiveness by measuring and driving downunnecessary costs in their manufacturing or retail supply chains(Hooley et al., 1998; Gripsrud et al., 2006). At the same time, theyhave improved the quality of their products to more effectively meetthe requirements of their customers (Cain, 2003). With this in mind, thehighly effective customers of the construction industry are demand-ing that their performance be replicated by the construction industry.Because of their knowledge and skills in supply chain integration,these ‘supply chain savvy’ clients can clearly see the inefficiency and

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waste that occurs at all stages of the design and constructionprocess. It may be supposed that the experience of such clients inreconciling conflict in their own supply chains would give them areasonable understanding of the likely problems of construction (Limet al., 2006). It seems imperative that the construction industryrecognises the benefits and improvements that can accrue fromadopting SCM and attendant logistics practices from other industries(Egan, 1998; Cartlidge, 2002; Kelly et al., 2002; Cain, 2003).

5. The role of Supply Chain Management (SCM) inconstruction

The supply chain is the network of organisations that are involvedthrough upstream and downstream linkages in the differentprocesses and activities that produce value in the form of productsand services in the hands of the ultimate customer (Cooper et al.,1997; Lambert et al., 1998; Handfield & Nichols, 1999; Lummus &Vokurka, 1999; Bowersox et al., 2002; Coyle et al., 2003). Parties in theconstruction industry include clients, designers, contractors, sub-contractors and materials suppliers as illustrated in Figure 2. All theseprovide inputs of one form or another that go towards the realisationof projects. All the direct resource inputs are supplied and managedby a linkage of companies that can, in aggregate, be termedconstruction supply chains. SCM implies the management ofupstream and downstream activities and relationships with suppliersand customers to deliver superior customer value at less cost to thesupply chain as a whole (Proverbs & Holt, 2000; Bowersox et al., 2002;Ellram, 2002).

It therefore follows that the object of effective SCM is the co-ordination of the spectrum of all supply activities of organisations fromtheir suppliers and partners to their customers referred to as clients inFigure 2 (Ganeshan & Harrison, 1995: online; Bowersox et al., 2002;Coyle et al., 2003). These tenets of SCM contrast sharply withtraditional construction procurement (Vrijhoef & Koskela, 2000;Vrijhoef et al., 2003).

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Figure 2: Resources supply in Construction Supply ChainsSource: Muya, 1999

Various authors have noted the fact that the construction industry’straditional approach to procurement has been characterised by alargely fragmented, inefficient, sequential, wasteful and adversarialprocess (Cartlidge, 2002; Fellows et al., 2002; Kelly et al., 2002; Cain2003). Principally, this is manifested in little, if any; contribution madeat the briefing, design and cost planning stages by main contractorsand specialist suppliers (Masterman, 1994). Hill & Ballard (2001) haveargued that failure to adequately capture construction supply chainexpertise at an early enough stage in the project delivery process isone of the primary causes of uncertainty, delay, increased costs andcontractual conflict.

To improve project delivery, Egan (1998) recommended the use ofintegrated teams and integration of the processes (Fellows et al.,2002; Kelly et al., 2002). In essence, the report recommended theapplication of SCM in the construction context (Egan, 1998). Thisinvolves looking beyond the product of construction itself, into theprocesses, components and materials that make up the output(Cartlidge, 2002; Cain, 2003).

SCM can bring benefits to all involved when applied to the totalconstruction process. The process should start with a detaileddefinition of clients’ business needs through the use of valuemanagement and end with the delivery of a product that provides

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an environment in which the client’s business needs can be carriedout with maximum efficiency and minimum facilities managementcosts (Morton, 2002; Cain, 2003).

The overall role of SCM in the construction industry is twofold. Firstly, todeliver improved value to the client in cradle-to-grave performanceof facilities. Secondly, to improve the profits earned by all involved.This can be achieved through the measurement and elimination ofunnecessary costs in the construction supply chain. Measurementcan help to identify and eliminate inefficiency and waste occurringat many stages of the design and construction processes (Morton,2002; Tansey et al., 2004; Tookey et al., 2004). SCM also focuses onfree information flow up and down the supply chain; feedback andlearning that leads to continuous improvement and value chainanalysis to determine where cost and/or value creation can beimproved (Fisher & Morledge, 2002; Cain, 2003; Tookey et al., 2004).

Generally it is important to view the philosophy of SCM in constructionas an extension of the concept of partnerships into a multi-firm effortto manage the total flow of goods inventory from supplier to theultimate consumer (Bowersox et al., 2002; Coyle et al., 2003). Withinthe concept of SCM there is an assumption of planning, forecastingand delivery efficiency leading to reduced inventory, waste, anddefects (Bowersox et al., 2002; Fisher & Morledge, 2002; Coyle et al.,2003).

Given the predominance of the subcontracting practice and otherdisintegrative practices in construction, research needs to beconducted to ascertain how SCM processes work and how they canbe improved in the South African construction sector. Various reportsand research over the years have identified disintegrative behaviouras being the root cause of many problems in the industry. Prominentamong the studies were those conducted by the CIDB (2004) andvan Wyk (2004). It is important to understand that construction isfundamentally a manufacturing operation generally utilising low costand high volume materials. These materials have to be moved toconstantly changing geographical locations. Consequently, theSCM function in construction should be of strategic importance.Given the risk-averse nature of modern construction, effectiveplanning should be taken as an essential precondition to thesuccessful execution of projects. Construction planners must take intoaccount all the dynamics related to production and other oper-ational issues of projects. The construction planner, therefore, oughtto plan materials distribution, movement to site and related

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information distribution and management and other SCM andlogistical activities carefully (Agapiou et al., 1998; Voordijk, 1999;Vrijhoef & Koskela, 2000; Briscoe et al., 2004. There have been anumber of studies undertaken on the supply chain management(SCM) concept and its contribution to construction process optim-isation. Notable among these were those undertaken by Lambert etal. (1998), Larson & Rogers (1998) and Marbet & Vankataraman(1998) These studies were well received and recently were enhancedthrough the contributions of Vrijhoef & Koskela (2000), Ofori (2000),Briscoe et al. (2004) and Saad et al. (2002).

Therefore, it is not surprising that SCM research has been driven by theneed to improve the efficiency with which the construction industryoperates its supply network (Briscoe et al., 2004). The emphasis ofconstruction procurement is currently on value adding supply chainrelationships (Cartlidge, 2002). This is because good lessons havebeen learnt from other sectors of the economy such as vehiclemanufacturing which, by taking a holistic view of supply chaininteractions, have developed closer value adding relationships(Lamming & Hampson, 1996). Following successes in other sectors, asmall but increasing number of construction organisations arebeginning to adopt SCM principles as a means to improving per-formance and to addressing their supply chain relationships.

SCM literature on construction has focussed considerably on leanproduction (Vrijhoef & Koskela, 2000) largely ignoring the moreoperational issues of SCM such as the logistics function. This is asignificant omission as the performance of materials handling,distribution and information flow in both upstream and downstreamlinkages are crucial in the SCM process for the construction industry(Agapiou et al., 1997; Agapiou et al., 1998; Voordijk, 1999; Vrijhoef &Koskela, 2000; Edum-Fotwe et al., 2001; Briscoe et al., 2004. A recentstudy by the Building Research Establishment (BRE) in the UK indictedthat 30% of construction costs are attributed to the transportation ofconstruction materials (Hill & Ballard, 2001; BRE, 2003). Therefore,construction is uniquely placed to benefit from improved logisticsbecause of the nature of materials consumed and the methods andvolumes involved. Currently, the transportation of constructionmaterials from the point of production to the point of consumption isuncoordinated and inflexible with the majority of constructionmaterials suppliers using their own vehicles assigned to dedicateddelivery schedules, delivering ad hoc to various locations (Agapiouet al., 1997, Agapiou et al., 1998). It is important to examine construc-

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tion vehicle transits in order to understand these operational issues oflogistics in the construction industry.

5.1 Construction vehicle transitsThe construction industry utilises millions of tonnes of materials andgenerates large quantities of waste. Moving these volumes ofmaterials and waste requires large numbers of loaded vehicletransits. For instance, the UK and South African construction industriesutilise 1000 million and 400 million tonnes of materials and generate100 million and about 10 million tonnes of waste annually respectively(DETR 2000, Lazarus, 2002, Shakantu et al., 2003; Shakantu, 2004).Given the above figures for material consumption and wastegeneration, the requirement for transportation of materials to andwaste from construction sites is clearly significant. For instance,transporting 100 million tonnes of construction and demolition (C&D)waste from sites around the UK alone equates to 5 million loadedvehicle transits, assuming that vehicles transporting waste were fullyloaded to their maximum capacity (Shakantu, 2004). When thevolume of materials being transported to sites, which is approximately10 times that of C&D waste, is taken into account, the shear scale ofthe transportation problem can be comprehended (Koskela, 1999;DETR, 2000; Shakantu, 2004).

A recent study seeking to optimise the logistics of construction foundthat construction materials delivery and C&D waste removal areusually considered to be entirely separate business activities(Shakantu et al., 2003). A consequence of this scenario is that eachvehicle type, when travelling to or leaving a construction site movesfull in one direction and empty in the opposite direction. There istherefore a significant opportunity to utilise some of the concepts oflogistics management to achieve process optimisation (Coyle et al.,2003; Nilsson, 2006). For instance, optimisation could be achievedthrough the application of reverse logistics solutions that merge theforward and reverse flows into one process (Srivastava, S.K. &Srivastava, R.K. 2006; Wu & Cheng, 2006).

5.2 Logistics managementLogistics management is a complex task within both the modernmanufacturing and construction industries. Effective logistics manage-ment implies a mastery of various key processes including planning,implementing and controlling the efficient, effective flow andstorage of goods, services and related information from the point of

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origin to the point of consumption in order to fulfil customer require-ments (Council for Logistics Management, [CLM], 1991). The abovedefinition by CLM reflects the need for the total management ofmovement from the point of origin of materials to the location of thefinished product. Additionally, logistics involves the integration ofinformation, transportation, inventory, warehousing, material handlingand packaging. Logistics management includes the design andadministration of systems to control the flow of materials, work inprogress and finished inventory to support business (Bowersox et al.,2002). To manage these flows, leading firms have developed logisticssystems capable of monitoring logistical performance on a real timebasis, giving them the ability to identify potential operational bottle-necks and to take timely corrective action (Bowersox et al., 2002).Operational strategies of the fast moving consumer goods (FMCG)sector such as quick response (QR) and electronic data interchange(EDI) which facilitate efficient transmission of data throughout thesupply pipeline and allow stores to link supply with real time demandcould be utilised.

5.2.1 Logistics systemsLogistics management provides a systems framework for decisionmaking that integrates transportation, inventory, warehousing spaceand other related activities that together encompass appropriatetrade-offs involving cost and service in the supply chain. A logisticssystem is a set of interacting elements, variables, and parts or objectsthat are functionally related to one another and form a coherentlogistics group (Bowersox et al., 2002; Coyle et al., 2003).

A large part of the logistics system is transportation. Transportation isone of the most visible elements of logistics operations (Bowersox etal., 2002). Transportation provides a major function in the logisticssystem, namely, product movement. In the construction industry, thesize of the transportation problem is very significant as sub-optimallyloaded vehicles move frequently through cities at inappropriatetimes. More often, adjacent sites fail to synchronise their activities andsubstantially contribute to the creation of congestion in the roadtransport system. Construction traffic also fails to ‘back-haul’materials from sites to the points of disposal. This contributes toincreases in vehicular traffic as additional vehicles need to be madeavailable to remove waste from sites. Increased vehicular trafficexacerbates noise and air pollution across cities. Concerns withgridlock and pollution have led to increasing analysis of approaches

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to controlling the flow of traffic in cities. Waste reduction andincreased recycling have also received more attention in recenttimes. There is a growing interest in the industry in reverse logisticssystems to support recycling and waste management (Coyle et al.,2003).

5.3 The emerging role of logistics in construction processoptimisation

Latham (1994) recommended the establishment of well-managedand efficient supply chains. According to Cartlidge (2002) this was tobe achieved through a reduction of development and productioncosts by 30%. For this reduction to happen it is important thatoperators and contractors work more closely together, pool infor-mation and knowledge can help drive down costs and thus indirectlypromote efficient supply chains and value for money. Conversely,operators should assist to remove waste from the constructionprocess. Within the supply chain this can be done through valueadding activities that increase logistical and operational benefits.

The role of physical distribution is critical to the logistics process. Itrequires skilful design and control of data flows connected withproducts and production. An integrated supply chain strategycreates a seamless supply chain for production and associatedlogistics processes. Logistics integrates stocks, materials acquisition,transportation and other systems. Effective logistics managementreduces costs. According to Tan (2001), the transportation systemallows organisations to deliver products and services in a more timelyand effective manner. Therefore, the role of logistics is to satisfy theup-stream and down-stream members of the supply chain.Integrated logistics activities provide supply chain members with theopportunity to optimise system performance. This represents a majordeparture from current logistics practices in the construction industrythat are characterised by disparate efforts with limited or nocoordination between organisations (Handfield & Nichols, 1999).

Catlidge (2002), Kelly et al., (2002), Cain (2003) and Tansey et al.,(2004) revealed that there are many stages of the design andconstruction process where inefficiency and waste occurs. Valuechain analysis can assist to determine where costs and valuecreation can be improved (Fisher & Morledge, 2002).

Currently, many firms do not understand or address the operationalelement of logistics. This position appears paradoxical considering

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that logistics is widely cited as the pre-eminent subset of SCM(Bowersox et al., 2002; Coyle et al., 2003). Earlier studies showed thatconstruction does not isolate logistics expenses and therefore there isno effort to reduce these costs. This is undesirable considering thattransportation accounts for a large proportion of logistics costs, andup to 50% of some basic materials such as sand (Shakantu et al.,2003). Consequently, there appears to be a significant need for anenhanced understanding of logistics in a construction context inorder to deliver the full benefits of SCM.

6. ConclusionSCM in construction is a way of working in a structured, organisedand collaborative manner shared by all participants in a supplychain. Each company is a link in a chain of activities adding value ateach stage designed ultimately to satisfy end customer demand(Cartlidge, 2002; Cain, 2003). SCM in a modern context emphasisesdelivering customer value without compromising the ability of eachmember of the supply chain to maintain a viable business, that is,everyone makes a fair profit.

The supply chain encompasses all those activities associated withprocessing, from raw materials to completion of the end product. Thisincludes procurement, production, scheduling, order processing,inventory management, transport, storage and customer serviceand all other supporting information systems. Logistics managementis concerned with optimising flows within the supply chain.

Because the supply chain works as one team and does not passunnecessary risk from one member to the next, supply chainoptimisation benefits spread throughout the procurement system.Risk is managed collectively. Moreover, the problem solving / win-winattitudes lead to avoidance or reduction of further risk. Improvedcollaboration means clients do not have to pay for risks that do notmaterialise. The entire team is more committed to economicsustainability of the construction process (Cartlidge, 2002). Thisbenefits both the client and the supply chain.

Given construction clients’ propensity to demand reductions inconstruction costs, facilitating effective and improved SCM andlogistical performance will be an increasingly attractive position forthe construction industry. Improved SCM and logistical performancewould invariably result in reduced cost, reduced risk and economicsustainability of the construction process.

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Primary points of interest to logistics should be the interfaces betweenparties, exchange of data and development across organisationalboundaries. The primary focus of the logistics function in construction,should therefore, be to improve coordination and communicationbetween project participants during the design and constructionphases. It should provide accurate scheduling of materials,coordination of supplies and organisational planning and control ofthe supply chain. It should seek to minimise non-value addingactivities and drive operating and investment costs and time in thesupply chain down. Consequently, there appears to be a significantneed for an enhanced understanding of logistics in a constructioncontext in order to deliver the full benefits of SCM. This calls for goingbeyond Egan’s SCM and advancing the role of logistics in aconstruction context.

7. Limitations of logistics and SCM in the constructionindustry

While the introduction of SCM concepts is generally accepted as aworthwhile development, the project nature of construction posesunique challenges when compared to other industries. In the vastmajority of cases, construction projects are one-off and locationdependent, requiring that resource inputs be obtained in theproximity of projects, thus often rendering organisational relationshipsrequired in SCM ineffective. However, given the scale of theconstruction logistics problem and its inherent cost to the industry,even a modest improvement would have significant results. Anyenvisaged future logistics optimisation will have implications on theselection criteria for suppliers. For instance, the logistical abilities of thecontractors with regard to contracts, appropriate mix of vehiclesrequired to fully service the logistics requirements of the projects inquestion, adherence to environmentally sustainable logistics normsand characterisation of the materials ordering processes all need tobe enhanced before the benefits espoused in this article can berealised.

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Voordijk, H. 1999. Location Dynamics of Global Manufacturing andDistribution. In: Muffatto, M. & Pawar, K.S. (eds.). Logistics in theInformation Age — Proceedings of the 4th International Symposiumof Logistics. Italy: Florence, p. 191-196.

Vrijhoef, R. & Koskela, L. 2000. The Four Roles of Supply ChainManagement in Construction. European Journal of Purchasing andSupply Management, 6(3-4), p. 169-178.

Vrijhoef, R., Koskela, L. & Voordijk, H. 2003. UnderstandingConstruction Supply Chains: a Multiple Theoretical Approach to Inter-organisational Relationships in Construction. Proceedings of theAnnual Lean Construction Conference (IGLC-11), BlacksburgVirginia, 22-24 July.

Wu, Y.J. & Cheng, W. 2006. Reverse logistics in the publishing industry:China, Hong Kong and Taiwan. International Journal of PhysicalDistribution and Logistics Management, 36(7), p. 507-523.

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Peter Richards & Paul Bowen

The management of clients’ strategicobjectives using the JBCC principalbuilding agreement: a case studyPeer reviewed

AbstractMeeting the strategic objectives of construction clients is paramount inconstruction procurement for the project to be regarded as successful by theclient. It is contended that the choice of contractual arrangement can act asa barrier to achieving these objectives. Through an analysis of the SouthAfrican JBCC Principal Building Agreement, the authors explore howcontractual arrangements can be a limitation to achieving the client’sconstruction strategic objectives. The research methodology adopted for theresearch comprises a desktop analysis of the JBCC Principal BuildingAgreement together with the analysis of a single case study to explore howthe JBCC Principal Building Agreement addresses the client’s strategicobjectives in theory and in practice. The findings indicate that the Agreementneither makes provision to deal with the client’s strategic objectives nor arethey met by its philosophy, structure, or parameters. It is concluded thatconstruction clients who use the Agreement or its equivalent for the benefit ofits convenience and familiarity should consider its adequacy to managestrategic objectives within the wider sense of the investment and businesscase of the construction project.Keywords: JBCC, strategic objectives, business case, construction client,contractual arrangement, South Africa.

Prof. Paul Bowen, Head of Department of Construction Economics andManagement, University of Cape Town, Private Bag, Rondebosch 7701, CapeTown, South Africa. Tel: (021) 650 3443, Email: <[email protected]>

Mr Peter Richards, Department of Construction Economics and Management,University of Cape Town, Private Bag, Rondebosch 7701, Cape Town, SouthAfrica. Tel: (021) 686 2798, Email: <[email protected]>

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Richards & Bowen • Management of clients’ strategic objectives inconstruction

AbstrakKonstruksieprojekte word deur kliënte as suksesvol beskou slegs wanneer hullestrategiese doelwitte bereik is. Daar word beweer dat die keuse van ’nbepaalde kontraktuele ooreenkoms die bereiking van sodanige doelwittemoontlik kan belemmer. Ontleding van die South African JBCC PrincipalBuilding Agreement deur die outeurs het hulle ondersoek na die wyse waaropkontraktuele reëlings moontlik die bereiking van die kliënt sekonstrukiseverwante strategiese doelwitte mag beperk, ondersteun. Dienavorsingsmetodiek ten opsigte van hierdie navorsing toegepas, behels ’ntekstuele ontleding van die JBCC en een gevallestudie om die wyse waaropdie JBCC Principal Building Agreement teoreties en prakties die kliënt sestrategiese doelwitte aanspreek, te ondersoek. Die bevindinge dui aan datdie Agreement nòg voorsiening maak om die kliënt se strategiese doelwitte tebevredig nòg voldoen die filosofie, struktuur of parameters van hierdieooreenkoms aan sodanige doelwitte nie. Die gevolgtrekking is dat kliënte watvan hierdie of ’n soortgelyke ooreenkoms gemaksonthalwe of omrede diebekendheid daarvan gebruikmaak, behoort die toereikendheid daarvan aldan nie om strategiese doelwitte rakende belegging en bedryfsaspekte in diebreë sin van die konstruksieprojek te bestuur, te oorweeg. Sleutelwoorde: JBCC, strategiese doelwitte, bedryfsaspekte, konstruksie kliënt,kontraktuele reëling, Suid-Afrika.

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1. Introduction

Construction works are procured for strategic reasons: houses,for example, are built to provide shelter from the elements,factories are built to accommodate the manufacturing

processes of industry, public amenities are built to providecommunity services, and commercial developments are undertakenby property developers for sale or investment. The strategicobjectives for construction, therefore, can be broadly defined interms of the needs of the construction client in relation to his or herultimate use of it upon completion. Classification of the strategicobjectives of construction in this manner, however, does notcomplete the set of strategic objectives for construction. In recentyears, for example, the socio-economic context of construction hasgiven rise to a second order of objectives for strategic ends, whichhave come to be applied to each stage of the development cycleof the built environment, namely:

• urban planning and development;

• project design;

• the manufacture of building materials and products;

• building construction and processes;

• maintenance and management of the built environment;and

• deconstruction and reinstatement of the environment,after the construction works have served their purpose(Ofori, 1998; Hill et al., 2002).

Strategic objectives aligned with the development cycle of the builtenvironment are premised upon the argument that constructionworks (i.e. infrastructure and buildings) should benefit society not onlyby their existence but also by the economic activity generated in theprocess of delivery (Drewer, 1975; Ofori, 1980; Edmunds & Miles, 1984;Wells, 1986; Rwelamila & Meyer, 1996).

The strong functionalist approach of construction, therefore, which inthe past focussed more on project delivery, and which wasmeasured by hard criteria like time, cost, quality and utility, has thusundergone a shift to create a balance by a more interpretiveapproach designed to:

• address poverty and inequity based on the redistributionof opportunity;

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• substitute natural to human made capital;

• ensure the carrying capacity of supporting eco-systems;and

• maintain the performance, quality and service life ofconstruction works (IUCN, 1980; Solow, 1993; Gladwin etal.,1995, all cited by Hill & Bowen, 1997).

These objectives relate specifically to the pillars of sustainableconstruction identified respectively as the social ‘pillar’, theeconomic ‘pillar’, the biophysical ‘pillar’, and the technical ‘pillar’ ofsustainable development (Hill & Bowen, 1997).

In view of the above, the strategic nature of construction raises twopertinent issues:

• the manner in which construction works are procured;and

• the measures applied to determine project success. These activities are linked.

The purpose of this article is to examine the extent to which the JBCCPrincipal Building Agreement facilitates the management (andhence attainment) of clients’ strategic objectives.

2. Research methodologyA review of the literature shows that the strategic objectives ofconstruction are well understood in procurement theory (Hibberd,1991; Green 1994; Rwelamila & Hall, 1994; Jennings & Kenley, 1996;Lenard & Moshini, 1998; Rowlinson & McDermott, 1999), andprocurement systems (Franks, 1984; Sharif & Morledge, 1994;Masterman, 1997; Hamilton, 2001). A large body of literature alsoexists to assist the procurement specialist in advising the constructionclient on which procurement system is best suited to the client’sindividual need (e.g. Love & Skitmore, 1996; Ofori, 1996; Masterman,1997; Kumaraswamy & Dissanayaka, 1998; Murray & Langford, 1998).The advice, however, appears useful only up to a point. For example,with the exception of Cox (1996, 1997), Cox & Thompson (1998), andCox & Townsend (1998), nothing could be found on the best choiceof supply relationship to be concluded between the constructionclient and the contractor, given the asset specificity of thecontractor’s service (i.e. residual, complementary or strategic) to theconstruction client in the realisation of its objectives related the

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investment/business case; nor was there any guidance on how toestablish the necessary links between the supply relationship and theform of contract consistent with such objectives; and nor was thereany direction on the choice of performance criteria and measuresneeded in the contract to manage and control supply chainresources activities sufficient to achieve objectives critical to thesuccess of the project.

The review of the literature was undertaken thematically within thecontext of the application of theory to the realisation of strategicobjectives in relation to a ‘separated’ and ‘coordinated’ (i.e. thetraditional or conventional) system of procurement. This was done inorder to narrow the area of investigation. Using a framework derivedfrom the literature, the study proceeded with a desk-top analysis ofthe JBCC Principal Building Agreement (2005) to understand thecharacteristics of the Agreement in terms of:

• the premise of its supply relationship;

• the division of roles and responsibilities between theparties;

• the structure of the control system and its inherentstrengths and weaknesses;

• performance criteria and measures;

• the distribution of risk; and

• the reimbursement mechanism. The desk-top analysis was followed by a field study of a single buildingproject to determine how the Agreement directs practice for therealisation of strategic objectives related to the investment/businesscase of a particular project.

The research was not hypothesis driven as there was no intention toprove or disprove any particular theories about strategy or themanagement and control of strategic objectives in the contractualarrangements of construction projects. It was more concerned withseeking to augment a theory of practice for the management andcontrol of strategic objectives within the context of a ‘separate andcoordinated’ (i.e. traditional or conventional) procurement systemusing the particular contractual arrangement of the JBCC PrincipalBuilding Agreement (2005). The methodology adopted, therefore,was evaluation research with a strong descriptive focus.

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Internal validity was achieved by explanation-building frominferences drawn from the data collected, making every effort toensure that evidence was convergent and that all rival explanationsand possibilities were adequately considered (Yin, 1994). Care wasalso taken to ensure a proper fit between the concepts (issues)involved and their measures (Edwards, 2001, citing Bryman, 1988).External validity in the traditional sense (i.e. the capacity to generalisefindings beyond the context of the case itself to a larger universe ofcases based on a ‘statistical’ generalisation) was not possible toachieve as only one case study was undertaken. The study, however,did focus on generalising the particular set of results to the broadertheory of procurement based on a process of ‘analytical’generalisation (Yin, 1994). The study, therefore, may be defined as‘instrumental’ case study research (Edwards, 2003), as the case wasundertaken to facilitate an understanding of the management andcontrol of the processes affecting the outcome of strategicobjectives in the contractual arrangements of construction projectsprocured under a ‘separated and coordinated’ (i.e. traditional orconventional) system using a particular contract form.

The research questions posed were thus:

• How are the strategic objectives of construction clientsmet and controlled in the JBCC Principal BuildingAgreement?; and

• How do the performance criteria of the JBCC PrincipalBuilding Agreement contribute to the measurement ofstrategic objectives at project completion?

Operational links were intrinsic to both questions and it was this issuethat constituted the rationale for choosing a case study design.

3. Desk-top analysis of the JBCC Principal BuildingAgreement

An analysis of the JBCC Principal Building Agreement shows that it isintended for use only to procure the construction works. The nature ofthe service to be rendered by the contractor is thus defined merelyas ‘the execution of the works’ (Cl. 2.1). The act of ‘execution’ of theworks in the Agreement is defined by two events: ‘commencement’(Cl. 15.3) and ‘completion’ (Clause 15.3.2; 15.3.3 and 15.3.4), which isrequired to be carried out “with due skill, diligence, regularity andexpedition ….” (Cl. 15.3) to the building standards as may bestipulated by the principal agent from time to time (Cl. 24.1.1). This

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description demarcates not only the extent of the service to berendered by the contractor, but also the limit of the contractor’sfocus for management and control, and the measures it will nodoubt apply to evaluate project success.

3.1 Procurement systemThe limitation of the contractor’s service to the execution of the worksonly implies that the Agreement is premised on the ‘separate andcoordinated’ (i.e. traditional/conventional) procurement system,and all the assumptions of procurement strategy that its use toowould necessarily imply (Masterman, 1997). Where the constructionclient’s strategic objectives cannot be met by the use of thisparticular procurement system, the Agreement would itself thereforebe an immediate barrier from the outset. This comment is made allthe more relevant by the fact of the wide use of the JBCC PrincipalBuilding Agreement as an industry standard in South Africa withoutdue consideration of the investment / business case drivers that maywarrant the use of an alternative procurement system and thus amore appropriate form of contract. Research in South Africaindicates that little attempt is made by the professional team tomatch procurement system characteristics with client objectives.Indeed, a significant proportion of professional advisors admit to aless than fulsome understanding of the characteristics of thesealternative systems (Bowen et al., 1999).

3.2 Contractual control mechanisms

3.2.1 Division of roles and responsibilities

3.2.1.a) The EmployerUnder the JBCC Principal Building Agreement (2005), the employerhas extremely limited powers. Having entered into contract bymutual agreement with the contractor, the employer has the powerto:

i. appoint the principal agent (Cl.5.1);

ii. appoint agents as stated in the schedule, and mayappoint further agents with the contractor being informedthereof (Cl.5.2);

iii. recover penalties for non-completion (Cl.30.1);

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iv. cancel the contract in the event of the contractor’sdefault (Cl. 36.1) or by reason of destruction to the works,or the destruction of an existing building to which theworks is intended to apply, howsoever caused (Cl. 37.1);and

v. recover damages, in appropriate circumstances (Cl.36.5.8).

In respect of the first item listed above, it should be noted thatappointment of the principal agent and other agents stated in theSchedule (Cls. 5.1.1; 5.2 or 5.4) is a material term of contract. Theemployer, therefore, cannot act directly on his or her own behalf inthe management of the contract. This issue often proves problematicin practice.

Failure to effect the appointments of the principal agent or otheragents stated in the schedule, or to replace them should they beunable to act or cease to be agents, entitles the contractor tocancel the contract (Cl.38.1.1). The remedy, however, may be toodrastic, except, for example, where the contractor believes that non-appointment will cause extreme prejudice. It is submitted, therefore,that a more appropriate remedy, if required, should be thesuspension of the works by the contractor until the employer hasfulfilled his or her obligations in this regard. No such relief, however, isavailable to the contractor in terms of the Agreement.

Further roles of the employer not addressed by the Agreement, butwhich are required by the South African Constitution and otherstatutory legislation include the employer’s role in:

• The protection of the environment (see the Constitution ofthe Republic of South Africa, Act No.108 of 1996: Sect. 24)(Republic of South Africa, 1996); and

• Issues of occupational health and safety under theOccupational Health and Safety Act (No. 85 of 1993)(Republic of South Africa, 1993) to be performed in termsof the Regulations published in the Government Gazette(No. 25207 of 2003) (Department of Labour, 2003).

The environmental concerns of development during the planningand design stages of a construction project are addressed in terms ofthe Regulations published in the South African Government Gazette(No. 18261 of 1997) (Department of Environmental Affairs andTourism, 1997), as derived from the Environment Conservation Act(No. 73 of 1989) (Republic of South Africa, 1989). Implementation of

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Environment Management Systems (EMS) for the management andcontrol of construction activities are not yet mandatory in SouthAfrica but guidance does exist in terms of the Code of Practice forEnvironmental Management Systems published by the South AfricanBureau of Standards (SABS, 1993) and the international specificationfor EMS developed by the International Organization forStandardization (ISO, 1995).

3.2.1.b) The principal agentThe authority of the principal agent under the Agreement does notfollow the common law rules of agency in South Africa in all respects.An agent under South African law is normally required to carry out hisor her mandate in accordance with the full instruction, or under thedirect commission, of his/her employer (Hosten et al., 1983). Theprincipal agent, in terms of the Agreement, however, enjoys widediscretionary powers and may, in accordance with this discretion,exercise his or her judgement independently. Moreover, interferenceby the employer in the independent exercise of the agent’s dutiesmay found a claim by the contractor against the employer fordamages, or even entitle the contractor to cancel the contract if theinterference causes the contractor prejudice (Cl. 38.1.7#). (Note: Theprincipal agent enjoys no such discretion in terms of this clause undercontracts concluded by the State, and the contractor’s rights in thisregard too fall away).

The effect of this arrangement means that the principal agentcannot be held accountable for his or her actions as an agententirely on the strength of his or her mandate. The employer thereforecan seldom, if ever, bring a successful action in contract but can onlyseek a remedy on the basis of delict (Hosten et al., 1983). This isbecause it is not inconceivable that the terms of the principal agent’smandate may be such as to give the employer a contractualremedy against him or her on particular facts without contraveningthe terms of the Agreement. This arrangement greatly weakens thecontrol the employer may exercise, inter alia, over the managementof strategic objectives.

Other than the powers retained by the employer as listed aboveunder item 3.2.1.a), the employer surrenders all of his/her otherpowers to the principal agent, who is ‘the only person who shall havethe authority to bind the employer, except where agents issuecontract instructions under delegated authority’ (Cl. 5.3). Forexample, it is only the principal agent who may:

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i. Issue contract instructions (Cl. 17.1);

ii. Permit work to be executed and installed by others forwhom the contractor is not responsible (Cl. 22.1);

iii. Give the contractor interpretations and guidance on thestandard and state of the completion of the works (Cl.24.1);

iv. Issue certificates of practical completion (Cl. 24.3.1), workscompletion (Cl. 25.2.1), and final completion (Cl. 26.3.1#);

Note: A certificate of final completion is deemedconclusive evidence as to the sufficiency of the works andthat the conractor’s obligations under the Agreementhave been met, other than for latent defects (Cl. 26.6)

v. Extend the construction period in certain circumstances(Cl. 29.7);

vi. Determine the amounts of payments to be made underan interim (Cl. 31.1) or final payment certificate (Cl. 34.5);

vii. Determine adjustments to the contract value (Cl. 32.1);

viii. Calculate the monies recoverable by the employer forpenalties (Cl. 33.1.1); default interest (Cl.33.1.2), andexpense and loss in terms of Clause 33.2 (Cl. 33.1.3);

ix. Settle disagreements and disputes between the employeror his/her agents on the one hand and the contractor onthe other that arise out of the Agreement (Cl.40.1), savethose that are referred to adjudication (Cl. 40.2.1#);mediation (Cl. 40.7) or arbitration (Cl. 40.5#);

x. Approve subcontract work (Cls. 24.3.1; 25.2.1 and 26.2.1 ofthe JBCC Nominated / Selected Subcontract Agreement(2005);

xi. Determine adjustments to the subcontract value (Cl. 32.1of the Subcontract Agreement); and

xii. Determine the amount to be paid to a subcontractorunder an interim (Cl. 31.0 of the Subcontract Agreement)or final payment certificate (Cl. 34.5 of the SubcontractAgreement).

All these powers granted to the principal agent are exercised withoutany contractual liability for the performance of its duties under theAgreement for the works. The reason for this is that the contract forthe works is concluded between the employer and the contractor.

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The principal agent is not party to its terms and is thus not ‘privy’ to it(Hosten et al., 1983). He or she is merely afforded powers under theAgreement to govern the contract. The principal agent’sresponsibilities are regulated by a separate contract of agreementconcluded with the employer to act in a supervisory capacity. Theprincipal agent’s contractual responsibilities, therefore, aredisconnected from the Agreement for the works. There is thus acomplete separation of the principal agent’s duty from the very basisof his/her responsibility and accountability.

3.2.2 Management of transactional behaviourThe instruments used to manage transactional behaviour under thePrincipal Agreement include:

i. security for due performance;

ii. penalties for non-completion of the works;

iii. rights of ‘set-off’; and

iv. certain mechanisms for the management of conflict.

3.2.2.a) Security for due performanceIn terms of the Agreement, the contractor may elect to provide theemployer with either a ‘variable’ or ‘fixed’ construction guarantee(Cl.14.3 or Cl.14.4 respectively) as security for due performance. Thepurpose of the security is to furnish the employer with a ready meansto satisfy partially any loss that it may sustain through a breach ofcontract by the contractor. Typically, this could include, latecompletion of the works, failure by the contractor to complete theworks (which may necessitate the engagement of others to do so), orrefusal by the contractor to re-do defective work, againnecessitating the employment of others to make good the defects(Finsen, 2005). It should be noted that payments made by theguarantor to the employer in terms of the construction guarantee donot prejudice the rights of the employer or the contractor under theAgreement (Cl. 14.6).

The merits of the different kinds of guarantee are beyond the scopeof this article but may be considered by referring to Finsen (2005).What is important to note, however, is that the constructionguarantee is restricted to the payment of money and that it ispayable at call (Cl. 14.3.4 or 14.4.5). The employer, therefore, is notput to the inconvenience of having to prove his or her loss before

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receiving payment. The apparent simplicity of the process ofrecovery, however, is not so easily realised in practice.

Should the contractor fail to elect a form of security contemplatedby the Agreement within (21) twenty one days of the acceptance ofthe tender, the employer may cancel the agreement (Cl. 14.7.2), oralternatively may ‘hand over the site to the contractor and withholdpayment from the contractor until the amount withheld is equal invalue to (10%) ten percent of the contract sum’ (Cl. 14.7.1). Themoney thus withheld is deemed to be a cash deposit although, in thisinstance, the employer would be under no obligation to hold it in aninterest bearing account (Finsen, 2005).

All forms of security place the employer in a very strong position ofcontrol as he or she is not required to exercise the common-lawremedy of placing the contractor into insolvency, at least in respectof the recovery of amounts up to the value of the security. It issubmitted that claims for damages beyond the value of theguarantee or cash deposit, however, must be recovered through thecourts.

3.2.2.b) PenaltiesDamages as a remedy for breach of contract are recompense fornon-performance. They are, therefore, not intended to recompensethe innocent party for his/her loss, but to put in him or her in a positionhe or she would have been if the contract had been properlyperformed (Victoria Falls and Transvaal Power Co. Ltd v ConsolidatedLanglaagte Mines Ltd. 1915 AD 1). The courts, therefore, subject tocertain qualifications, are concerned only with the financial positionof the innocent party. For this reason, damages need to be provedotherwise none will be awarded (Christie, 2006). This, however, is notthe case with penalties agreed between the parties to a contractsince the enactment in South Africa of the Conventional PenaltiesAct (No. 15 of 1962) (Republic of South Africa, 1962). Penalties do nothave to be an accurate pre-estimate of the damages likely to besuffered, nor are they limited to a consideration of the financial losslikely to be suffered by the employer. Penalties may include‘everything that can reasonably be considered to harm or hurt, or becalculated to harm or hurt a creditor in his property, his person, hisreputation, his work, his activities, his convenience, his mind or in anway interferes with his rightful interests as a result of the act or omissionof the debtor’ (Van Staden v Central South African Land and Mines1969 (4) SA 349 (W), cited by Finsen, 2005: 144).

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Today, therefore, it is not uncommon for parties to an agreement toinclude a term in the contract which binds one party to pay a fixedsum of money (a penalty) in committing a specified breach orperhaps any breach of the contract. As mentioned above, theConventional Penalties Act regulates penalty provisions included incontracts. The most significant points of regulation being that whereexplicit provision is made for a penalty, the innocent party may notalso claim damages for the same breach, nor the recovery ofdamages in lieu of the penalty, ‘except where the relevant contractexpressly so provides’ (S 2(1)). The second point of significance is thatthe courts may reduce the amount of the penalty if it appears to beexcessive (S 3).

Provision is made under the Agreement for a penalty to be paid tothe employer in the event of ‘non-completion’ of the works by thedate for practical completion stated in the Schedule, or by suchrevised date as may have been determined for practical completionby the principal agent (Cl. 30.0). The penalty, therefore, relates onlyto the loss of time under the Agreement.

One may interpret from the provision for a penalty in the event ofnon-completion of the works that time is not the ‘essence’ ofcontract under the Agreement, but merely ‘material’ from the pointof view of the employer who stands to suffer financial loss should theworks not be completed on time. In terms of the Agreement, thepenalty is calculated as a fixed sum per day for every day that theworks remains incomplete.

The benefit of a penalty clause under the Agreement again is thefact that the employer is not required to prove the extent of his/herdamages at law before making a claim against the contractor. Theprincipal agent shall merely calculate the penalty due from the dateof practical completion stipulated in the Schedule to the actual dateof practical completion (Cl. 30). The amount of such penalty shall bereflected in the recovery statement and the amount due shall bededucted against the payment certificate issued to the contractor(Cl. 33.1.1 and Cl. 33.3).

Whereas the penalty provision under the Agreement generally actsas a strong deterrent against the contractor not completing theworks on time, it is submitted that its effect does not necessarilyextend to all cases of non-completion. For example, constructionworks of a relatively low value may nevertheless place the employerat severe risk if not completed on time. A high penalty provision in

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such circumstances may make contractors hesitant to submit a pricefor its execution, or they may merely include the amount of thepenalty in the tender, or an amount equal to their perception of therisk to which they are exposed by contracting for the works.Circumstances such as this may require the employer to forego themechanism of a penalty to control transactional behaviour, andcompel him/her rather to implement some other measure tomanage the risk in the interests of procuring the works within anacceptable market budget. On the other hand, a low penalty,which in itself may be an accurate pre-estimate of damages likely tobe suffered by the employer in the event of non-completion, serveslittle or no purpose.

3.2.2.c) Rights of ‘set-off’The right of ‘set-off’ is a recognised principle in South Africancommon law (Schierhout v Union Government 1926 AD 286, cited byChristie, 2006), and is thus not an extraordinary remedy for therecovery for debts that are liquidated and fully due. The right can beexcluded by contract. The right of ‘set-off’, however, is not excludedby an explicit contractual term under the Agreement and is,therefore, available to both parties. It is submitted, however, that therights of ‘set-off’ are limited in scope to the explicit provisionsrecorded in the Agreement. It should also be noted that the rights of‘set-off’ between the parties are weakened by the fact that they areplaced under the governance and control of the principal agentwho is the only one who may deal with debts that arise between theparties under the Agreement by way of ‘set-off’ (Cl. 33.3.1).

Items of expense and loss that the contractor may recover from theemployer are limited to:

• Compensatory interest (Cl. 33.1.4);

• Default interest (Cl. 33.1.5); and

• Damages arising out of the employer’s default andcancellation of the contract by the contractor (Cl. 33.1.6);and

• Advance payments (Cl. 33.1.7)The employer’s rights of ‘set-off’ under the Agreement for therecovery of loss and expense are much wider than that of thecontractor and include:

i. Penalties for non-completion (Cl. 33.1.1 and 30);

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ii. Default interest (Cl. 33.1.2 and Cl. 31.12);

iii. Insurance premiums paid which the contractor has failedto remit (Cl. 33.2.1);

iv. The cost of engaging others to carry out contractinstructions which the contractor has failed to execute (Cl.33.2.2);

v. Additional costs arising from the cancellation of anominated subcontract due to the default or insolvencyof the contractor (Cl. 33.2.3);

vi. Interest on any amount due by the contractor to theemployer in terms of a previous interim paymentcertificate (Cl. 33.2.5);

vii. The additional cost of completing the contract whetherthe contract has been cancelled due to the default of thecontractor (Cl. 33.2.6);

viii. Amounts paid directly to nominated and selectedsubcontractors on the failure of the contractor to makesuch payments (Cl. 33.2.8); and

ix. Default by the contractor (presumably for any other loss orexpense incurred by the employer), subject to seven (7)calendar days notice detailing such default has beengiven prior to the issue of the next recovery statement inorder to allow the contractor the opportunity to remedysuch default (Cl. 33.2.7).

It is submitted that the scope of the employers rights of ‘set-off’ underthe Agreement provide a strong (albeit indirect) tool in themanagement of the transactional behaviour of the contractor,especially in view of the fact that the principal agent’s recoverystatement and accompanying payment certificate would provideprima facie evidence of the extent of the loss and expense due forrecovery by the employer.

3.2.2.d) Certain mechanisms for the management of conflictIn an effort to facilitate a structured process of negotiation, theAgreement commences the dispute settlement process with theneed for a notification to be given in writing by the aggrieved partyto the respondent calling on the latter to resolve a ‘disagreement’(Cl. 40.1). No procedures are given, however, on how to ensurelegitimacy of the nature of the disagreement, or on how to make

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sure that the disagreement is properly documented before referringthe matter up to the next level of management in both organisations,and/or prior to third party determination. The wide ambit of theclause, permitting ‘any disagreement’ between the parties beingthe subject of notice (Cl 40.1), therefore, could lead to an abuse ofprocess

The Agreement provides no definition as to what constitutes adisagreement and, added to the complexity of the wording, theAgreement elevates a ‘disagreement’ to the level of a ‘dispute’ aftera lapse of a nominal period of 10 (ten) days from the date ofnotification (Cl. 40.2). This elevation of status of a ‘disagreement’takes place notwithstanding the linguistic difference between theterms both in substance and subject matter (see Longman Dictionaryof Contemporary English, 1991; Concise Oxford English Dictionary,2004) and makes the dispute now immediately subject toadjudication by a third party (Cl. 40.2.1#). Although, by so doing, theparties are not thereby deprived of their rights to resolve a dispute bymediation at any time (Cl. 40.6#)

Finsen (2005) in his interpretation of clause Cl. 40.1 around the issue ofa disagreement makes no clear distinction between the terms‘disagreement’ and ‘dispute’, using them interchangeably, and citesmerely two decided cases which propose that a disagreement mustbe a genuine disagreement, involving differing and conflicting pointsof view held by the respective parties, and not merely a failure of oneof them to honour a contractual obligation. He argues, therefore,that if the respondent maintained his/her silence on the matter itcannot be said that a disagreement exists between the parties. Theaggrieved party, therefore, would be put to the inconvenience ofapplying to court for a ruling in these circumstances. Finsen’sargument is based on a proposition that a lack of ‘disagreement’would prevent the issue from being brought within the scope of thedispute-resolution clause. The authors, however, question thisinterpretation in light of the most recent and authoritative Englishdecision on what constitutes a “dispute” and how it may beconstrued to exist (Collins (Contractors) Ltd v Baltic QuayManagement (1994) Ltd [2005] BLR 63 CA 74).

The next step available to the parties should the disagreement not beresolved within a period of 10 (ten) days) is adjudication (Cl. 40.2.1#),providing the parties did not agree otherwise at the time of contractto proceed rather directly to arbitration (see Cl. 42.7.1 of theschedule). A State employer, however, proceeds directly to litigation

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where a disagreement remains unresolved (see Cls. 40.2.1# and40.2.2# read together). The further option to proceed to arbitration,should the adjudication be challenged thus falls away in regard tothe State.

The process of adjudication is a dispute settlement mechanismrecently borrowed from English law and adopted in the Agreement(Cl. 40.2.1#). The mechanism is also widely applied in other majorconstruction agreements used in South Africa (See FIDIC, NEC3 andthe 2002 edition of the GCC). The most obvious benefit of themechanism is that it is informal and thus quick and easy to apply,providing speedy relief to the affected party. The JBCC AdjudicationRules (2005) require the adjudicator to make a determination within20 (twenty) working days, subject only to an extension of time of 10(ten days) by mutual agreement between the parties (Rule 7.1.1).

The weakness of the adjudication process in South Africa is that thereare no statutory provisions to enable a court to appoint anadjudicator, where the parties themselves could not agree on theappointment, nor to set aside the adjudicator’s appointment on thegrounds of bias or his determination for misconduct, nor to enforcethe adjudicator’s decision (Finsen, 2005). The other challenge of theadjudication process is that the adjudicator determines an issue as anexpert and not as an arbitrator and can, therefore, be heldresponsible for its result if the determination is defective and causes aloss to either of the parties (Finsen, 2005). This may make it difficult toappoint someone as an adjudicator in the absence of a formalindemnity by the parties releasing him/her from such a consequence.

For reasons not immediately evident in the Agreement, or from therelevant literature, no obvious clarity exists on why the option oflitigation is reserved only where the State is the employer (Cl. 40.2.2).The State, clearly, may prefer litigation for reasons of probity andtransparency in the event of a dispute affecting public funds. Privatesector clients, however, may also have strategic reasons forpreferring rights to litigation in the event of a failure to resolve adispute. These may well include, inter alia, the leverage it providesover a supplier as a threat of a loss of confidentiality due to the publicnature of litigation, especially if the supplier is a public company or issensitive about its reputation due to past behaviour, or even as unfairleverage, merely to retain the peril of a costly legal battle if disputesare not speedily settled. There may, therefore, be sound reasons forall parties, both public and private, to retain a right to litigation in theinterests of the investment/business case.

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Arbitration in South Africa is regulated in terms of the Arbitration Act,No. 42 of 1965. Arbitration as a mechanism of dispute settlement,however, is not new. It has been practised since Roman times. Acomprehensive review of the merits and disadvantages ofarbitration, therefore, are beyond the scope of this article, other thanto mention a few points that determine its efficacy as a mechanismto resolve disputes between contracting parties in South Africa, andthe scope of disagreements/disputes that may be referred toarbitration under the Agreement.

Provision is made in the Act for the courts to support and assist theprocess of arbitration. The arbitrator’s award, therefore, is final andbinding unless otherwise ‘agreed’ by the parties (S 28) (Note: no such‘agreement’ is provided for in the Agreement). The courts, therefore,will not set aside the arbitrator’s award except in certaincircumstances (S 33). The scope of disagreements that may bereferred to arbitration under the Agreement include “…anydisagreement between the employer or his agents and thecontractor as to any matter arising out of or concerning thisagreement ….’’ (Cl.40.1), and “…. any disagreement between thecontractor and the subcontractor as to any matter arising out of thisn/s agreement ….” (Cl.40.1 of the JBCC Nominated / SelectedSubcontract Agreement (2005)).

Finsen (2005), citing Kathmer Investments (Pty) Ltd. v Woolworths (Pty)Ltd.1970 (2) SA 498 (A), points out that the provision thus also includes“a dispute about any of the rights and obligations of either of theparties under the Agreement”, as well as “a dispute as to whethereither party had breached the Agreement or not, and a dispute asto whether a term of the Agreement should be rectified.” As thedispute resolution clause survives the cancellation of the contract(Cl.40.10), Finsen (2005) suggests that a dispute as to whether or not aparty which has cancelled the contract was lawfully entitled to do sowould come within the scope of this clause.

3.3 Performance management

3.3.1 Time managementThree criteria/descriptors are given in the Agreement that require theexecution of the works (Cl. 2.1) be carried out with speed: ‘diligence’,‘regularity’ and ‘expedition’ (Cl. 15.3). No objective measures relatedto these criteria, however, are provided in the Agreement, which

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leaves the employer without any direct or proactive means ofmanagement and control over time. The contract JBCC Preliminaries(2005) stipulates merely that the contractor ‘shall be responsible for aprogramme for the works’ (Cl. 4.2 of the Preliminaries document), butplaces no onus on the contractor to construct the works inaccordance with the programme or to update it at regular intervalsin accordance with actual progress on site. The Agreement,however, does make express provision for the recovery of damages(penalties) in a fixed amount per day in the event of delayed or non-performance (Cl. 30.0). The employer is thus merely afforded aremedy to recover any pecuniary loss suffered by reason of latedelivery (Cl. 33.1.1). The means of control is thus indirect and reactive.

The employer also may not cancel the contract for reasons arisingfrom a general failure of the contractor to proceed with diligence,regularity and expedition unless he or she has issued notice in terms ofthe Agreement (Cl. 36.2).

3.3.2 Cost managementThe management of cost in the Agreement falls wholly outside thecontractor’s responsibility. The reason for this is that the employermust prepare and provide the documents on which the contract ofagreement is based. The contractor merely tenders a price based onthese documents. After acceptance of the price, it is only theemployer who may vary its amount through instructions issued by theprincipal agent (Cl.17.1). Cost, therefore, is the responsibility of theemployer and is thus not a performance measure under thecontract.

Several other issues were identified in the Agreement that further limitthe employer’s control over cost:

• The contract sum ‘as stated in the schedule’ is recordedmerely for the purposes of contract. It does not establishthe employer’s obligation to the contractor. It is merely areference point (Finsen, 2005). The Agreement uses amechanism termed the ‘contract value’ that is equal tothe ‘contract sum’ as the instrument for varying thechange in cost. A review of the conditions for change inthe ‘contract value’ listed in the Agreement (Cl. 32) wouldseem to indicate that there is no intention to fix the finalcost of the works at the outset;

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• There is no provision in the Agreement that obligates thecontractor to keep the employer informed on the currentfinancial status of the works. The employer is thus reliant onthe professional team for such information, which oftenlags in the reporting process due to procedures andtimelines (Bowen & Edwards, 1996); and

• The employer’s control over cost is not direct. Themanagement of cost falls under the control andadministration of the employer’s principal agent whoenjoys an independent discretion in the exercise of his orher duties (Cl. 38.1.7#). The Agreement records expressly,that only the principal agent ‘shall determine the value ofadjustments to the contract value’ (Cl. 32.1).

In practice, however, especially on contracts let with a highproportion of prime cost/provisional sum items, and/or where theproject budget is under threat, it is not uncommon for the contractorto play a significant role in assisting the principal agent to exploreways and means to manage and control cost through alternativespecifications, designs, and/or building methodology. Thecontractor, however, is under no contractual obligation to performthis service.

3.3.3 Quality managementThe descriptor/criterion used in the Agreement to define therequirement for quality is the term ‘due skill’ (Cl. 15.3). No definition ofthis term is given in the Agreement and reference must thus be madeto other reliable sources in order to gain a broad understanding of itsintrinsic meaning. Reference to Longman Dictionary of ContemporaryEnglish (1991: 985) suggests that ‘skill’ is defined as “a special ability todo something well.” By implication this would require both a familiarknowledge of the art or science necessary to undertake the task, aswell as the practical mastery required for its ‘execution’. Thequalification given to the type of skill required is that it shall be ‘due’skill, that is a skill (or a standard of proficiency) demanded by the verynature of the works to be executed. No objective measures for thecriterion, however, are given in the Agreement, which makes it verydifficult to decide in advance how quality will be managed andcontrolled. The contractor must obviously produce a satisfactorystandard of workmanship, and the common law position in SouthAfrica is that the contractor must produce a standard of workmanshipthat is of a similar standard to that produced by other competentcontractors working in similar circumstances (Finsen, 2005).

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The Agreement does provide a contractual stipulation stating that“the principal agent shall inspect the works from time to time to givethe contractor interpretations and guidance on the standard … ofthe works” (Cl. 24.1.1). The obligation, however, does not extend tosupervision or responsibility for the works to ensure compliance. Thissituation may be described as a divided responsibility (Rwelamila,1996) and constitutes a breakdown in the communication processnecessary to maintain the link between the client’s expectations andthe final quality of the outcome of the works.

It should also be noted that there is a growing body of literaturecritical of the reactive focus of operational techniques and activitiesof ‘quality control’ and ‘quality assurance’ practices that havebecome a primary source of problems facing the constructionindustry globally (Rwelamila, 1996). Quality management inconstruction, however, ideally requires the implementation ofsystems that proactively minimise mistakes, and is not merely a bolt-on system of inspection that must continually order remedial actionon completed work.

3.3.4 Risk ManagementThe most important risks assumed by the employer relate to the verynature of the commercial venture to procure the works. As Stevens(2001) points out, risk is an intrinsic attribute of construction andproperty development. These risks could be defined as the risksrelated to the strategic objectives arising from the investment /business case. None of these risks, however, are explicitly defined formanagement in the Agreement, and any provision for theiradministration can only be inferred from the extent to which they areincluded within the parameters of time, cost and quality inherent inthe contractor’s responsibilities for the ‘execution’ of the works. Theflaw in the risk management system under the Agreement thereforeappears to be its very separateness from the commercial context ofthe overall strategic objectives for the project.

3.3.4.a) The employer’s risksRisks borne by the employer include those external risks listed asuninsurable by the South African Insurance Associations Exceptions.These risks include risks to the works arising from, inter alia, war, riot,nuclear activity, confiscation, nationalisation or requisition by anypublic or local authority (Cl. 8.5). Insurance for riot and related risks,however, may now be insured through the South African Special Risks

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Insurance Association (SASRIA) and provision is made in the Scheduleto record the limit of liability should the employer elect that suchinsurance be effected.

Other risks specifically excluded from the contractor’s responsibilitybut that are internal to the project and fall on the employer (See Cls.8.0 and 9.0). (with due regard to certain exceptions) include, interalia: • acts or omission of the employer, the employers servants or

agents and those for whose acts or omission they areresponsible (Cl. 9.2.1);

• an act or omission of a direct contractor appointed by theemployer (Cl. 9.2.2);

• design of the works where the contractor is not responsible(Cl. 9.2.3);

• the occupation of any part of the works by the employer orhis tenants (Cl. 9.2.4);

• the right of the employer to have the works or any partthereof executed at the site (Cl. 9.2.5#);

• interference with any servitude or other right that is theunavoidable result of the execution of the works includingthe weakening of or interference with the support of landadjacent to the site unless resulting from any negligent actor omission by the contractor or his subcontractors (Cl.9.2.6#);

• physical loss or damage to an existing structure and thecontents thereof in respect of which the Agreement is forthe alteration or addition to the existing structure (Cl. 9.2.7#);

• physical loss or damage to the contents of the works wherepractical completion has been achieved (Cl. 9.2.8#);

• the use or occupation of the site by the works (Cl. 9.2.9#);and

• advance payments where certified and duly made by thecontractor to nominated subcontractors or selectedsubcontractors (Cl. 9.2.10#).

It should also be pointed out the employer is responsible for all thecontractor’s risks that exceed the amount of the contract worksinsurance as may be stated in the Schedule (Cl. 8.4).

The contractor, however, has an explicit obligation to inform theprincipal agent of any physical loss and damage that comes to his orher attention (Cl. 8.7).

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3.3.4.b) The contractor’s risksThe contractor’s listed risks relate to the risk of the works, from thedate of possession of the site to the date of practical completion. Theextent of the contractor’s risk in this regard includes the making goodof physical loss and repairing damage to the works (Cl. 8.3.1); thereplacement value of materials and goods supplied by the employerto the contractor (Cl. 8.3.2), and the cost of additional professionalservices of the employer’s agents.

The contractor’s liability for risks, therefore, is wholly internal to theAgreement in the execution of the works and is not explicitly focusedon any of the broader issues of procurement that could determinestrategic objectives.

3.3.4.c) The professional advisor’s risksProfessional advisors under the Agreement carry the least risk for theirparticipation in the construction project, notwithstanding thetremendous impact they are able to have on the project process,both negative or positive. The reason for this in South Africa isbecause of the doctrine of the privity of contract. Parties who are notprivy to a contract cannot sue or be sued on it (Christie, 2006).Professional advisors, therefore, carry no contractual responsibilityderived from the Agreement for activities related to the execution ofthe works. They are, however, responsible for the risks associated withthe execution of their own services and responsibilities to theemployer under separate agreement, and the employer’s internalproject risk is moderated to this extent.

3.3.4.d) The reimbursement mechanismIn terms of the Agreement, the contractor is entitled to receiveinterim payments (Cl. 31). This practice is a departure from SouthAfrica’s common law for the letting and hiring of work. In terms ofSouth Africa’s common law of locatio conductio operis, theconductor operis is ‘normally obliged to carry out the work which heis engaged to do before the contract money can be claimed’ (DeWet & van Wyk, 1978: 138). The basis of this law is known as theprinciple of reciprocity which requires that there should be anexchange of performances between the parties to an agreement(Christie, 2006). The contractor’s right to an interim payment,therefore, is contractual. The fact that it is interim, however, does notmean that it is made in settlement of the employer’s obligations for

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work done. This is an important point in favour of the employer in themanagement of cost. The courts in South Africa have held thatinterim payments made are merely advance payments against thetotality of work still to be done (Thomas Construction (Pty) Ltd (in liq) vGrafton Furniture Manufacturers (Pty) Ltd 1988 (2) SA 546 (A)). Thismeans that interim payments are subject to revision on reasonablegrounds and may be amended in value at the time when futureinterim payments are made, or at the time of determining the finalaccount.

The amount certified is required to be a ‘reasonable’ valuation of thetotal amount of work carried out to date, including variations, plus areasonable valuation of unfixed materials and goods, whether on oroff site, procured by the contractor for the works, less the totalamount previously certified and with Value Added Tax (VAT) addedto the resulting amount (Finsen, 2005). Finsen states, however, thatonly the final certificate for payment is a liquid document.

Interim payments are required to be calculated monthly and apayment certificate issued (Cl. 31.1). The principal agent is notpermitted to omit the issue of the certificate for any reason, even ifthe contractor has failed to bring the works to practical completionby the date stated in the Schedule. The reason for this is that theAgreement makes provision for the preparation and issue of a‘recovery statement’ at the same time as the issue of the paymentcertificate which, inter alia, makes provision for the recovery ofpenalties levied in terms of Cl. 30 in the event of non-completion. Thepayment certificate, therefore, may be for a nil or negative amountas may be determined by the circumstances prevailing at the time ofissue, but it must still be issued in terms of the explicit requirements ofthe Agreement.

With the exception of State contracts concluded in terms of theAgreement, the level of control that the employer may exercise overthis process is again limited by the independent authority enjoyed bythe principal agent.

4. Project delivery using the JBCC Principal BuildingAgreement: a case study

Details of the case study reported here are drawn from Richards et al.(2005). A single case study approach was adopted as the projectinvolved the use of the standard JBCC Principal Building Agreementbetween a contractor and a developer with a Development

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Agreement between the developer and the construction client. Assuch it constitutes an ‘extreme’ or ‘unique’ case (Yin, 1994; UnitedStates GAO, 1990) which, because of the existence of the twoagreements, highlights the shortcomings of JBCC Principal BuildingAgreement in addressing the client’s strategic objectives in the waythe project process is made more complex when used alongside othersets of agreements which more closely reflect those objectives. At thetime of the collection of the data, the contract for the project hadalready been signed between the client and the developer, andconstruction had been in progress for several months.

4.1 The ClientThe client is an established tertiary education institution in the publicsector that actively engages in education, training and research. Theclient’s activities are funded through a combination of state fundingand fee income. Owing to the restructuring and changing priorities ofgovernment, state funding for South African tertiary institutions is in astate of flux with funding being re-directed to redress historicalimbalances with a consequent reduction in state subsidy to the client.To succeed, tertiary institutions are adopting a more business-likeapproach to management and marketing, boosting revenue byincreasing the number of students, rationalising courses offered,enrolling more foreign students and entering into partnerships with theprivate sector in commercially exploiting research. The client’s mission isto be foremost in its areas of service in meeting the education needs ofSouth Africa within the parameters of government objectives, theimperatives determined by industry, and the expectations of theinternational community.

The client’s strategy of increasing student enrolments and improving itsresearch facilities has led to a considerable construction programmeinvolving a number of new-build and refurbishment projects. Inaddition, the existing built estate requires an extensive maintenanceprogramme. The client, therefore, commissions a steady stream ofsmall- to medium-sized projects with at least one major newdevelopment every two to three years in the range of R30m to R50m(R14.00 = 1 GBP, December 2006). Table 1 presents the client’sconstruction procurement features and processes.

Table 1: The Client’s construction procurement features andprocesses

The categories of the construction work undertaken by the client withtheir associated different business requirements are classed as new-

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build, extension/modification and maintenance/refurbishment. New-build projects are affected by the limit of available funds. Research

Supply chain

The client maintains a separate department responsible for itsproperty development and maintenance programme. Thedepartment is well staffed with its own project managers, architects,engineers and quantity surveyors and it is able to manage projectsup to R5m. Projects larger than R5m are outsourced.

Supply chainrelationship

The client maintains a database of service providers for professionaland construction services, and specialist suppliers. Inclusion on thedatabase is subject to a registration procedure. Selection of aservice provider for appointment to a particular project Is based firston the State’s policy for black empowerment and preferentialprocurement and thereafter follows an assessment of technicalcompetence, capacity, programme, and an understanding of theclient’s requirements. The client, therefore, outsources only topreferred suppliers. Professional consultants are appointed more orless on a rotation basis. Construction contractors and suppliers aresubjected to competitive tender.

Procurementstrategy

Construction management is the preferred route of procurementfor all projects under R5m. The main reasons for following thisorganisational method of procurement are that it:• Allows the client to have a single point of contact with the

supply base;• Permits separate competitive tendering for all trade work

packages and thus maximises cost savings;• Affords an intimate understanding of market pricing;• Strengthens the client’s strategic costs and value management

systems; • facilitates fast-track programming, and thus early project

delivery;• builds internal capacity in regard to product development;• facilitates lessons learnt which can be carried forward within

the client’s organisation;• is focussed on strategic objectives driven by the low allocation

of monies in current annual capital expenditure budgets.Projects above R5m are wholly outsourced under the separate and coordinated (i.e. traditional) procurement system using a single principal building contractor.

Contractualarrangements

Projects procured under the construction management model arecontracted in terms of the JBCC Minor Works Agreement (2005) foreach trade package. Outsourced projects are contracted in termsof the JBCC Principal Building Agreement.

facilities are funded mostly by money made available through grantsobtained locally or from abroad. The allocation of these funds is drivenby strong stakeholder interests. Student accommodation is procured onthe strength of the business case by contracting with a developer usinga lease back mechanism in order to avoid the need to raise largeamounts of development capital. There is a strong focus on whole life-cycle costs on these projects rather than on initial capital cost.

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The client has definite generic strategic objectives for all its constructionprocurement as shown in Table 2. However, specific strategicobjectives arising from the business case are identified and defined ona project-specific basis.

Table 2: Schedule of Client strategic objectives in construction

Socio-economicobjectives

The client endorses the principles of:• sustainable development, as enunciated in the constitution and thus

seeks to comply with all statutory provisions and guidelines governingits own projects in the built environment;

• Sustainable construction, and has thus instituted an Environmental Management System (EMS) framework in accordance with ISO 14001 for implementation on all their projects;

• The involvement of previously disadvantaged and marginalised sectors/individuals and thus procures its construction works in accordance with the Preferential Procurement Policy Framework Act, No. 5 of 2000, and the targeted procurement policies developed by the Depart of Public works;

• a safe working environment for all its staff and external service providers appointed to work on its property, and thus seeks to comply with the provisions of the Health and safety Act, No 85 of 1993, and the Draft Construction Regulations published in Government Gazette 23310 of 2002.

Technologicalobjectives

The client has developed standards for all construction materials andfinishes, building systems, installed equipment, and furniture andfittings. The standards relate directly to whole life-cycle building costswhich must fall within defined parameters.

Operationalobjectives

Design functionality for all construction works must adhere to theoperational requirements of its various departments responsible forthe running and maintenance of its buildings after projectcompletion.

Aesthetics

The client maintains its own aesthetics committee which is mandatedto ensure that all its buildings fit the context of the environment intowhich they are placed. In this regard, the client also seeks tocooperate with the aesthetics committees of other bodies, whetherregulated or not, which may have a vested interest in the client’sconstruction projects.

Organisationalobjectives

The client seeks to develop and empower its staff and thus increaseits organisational capacity by the process of the development of itsown property. Objectives in this regard, are defined and undertakenon a project specific basis.

Stakeholderobjectives

The client maintains a proactive relationship with all its regularstakeholders and has constituted various forums in which to engagewith them on a regular basis. Project stakeholders are identified atthe inception of each project and their needs are identified fornegotiation in terms of project objectives.

Functionalobjectives

Objectives related to time, cost, and quality are project specific and areidentified for management in terms on the investment/business case.

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4.2 The ProjectThe project was a new build student residence located on a piece ofland strategically purchased by the client some years prior to thedecision to build. The business case for the project arose from ashortage of student accommodation. The business case suggeststhat the annual cost of the lease offered by the developer whowould finance and build the new residence could be covered bythe normal accommodation rental paid by students. Demand fromend users was high and before the accommodation for theresidence was built it was fully subscribed. The success of the businesscase, however, was premised upon gaining completion of thestudent residence before the commencement of the academicyear. Failure to gain completion by that time would have severalsignificant consequences to the client:

• the loss of the enrolment of the students who had appliedfor residence in the new facility, not only for the firstacademic year, but also for the full period of timeintended for their studies; and

• the loss of the revenue for the whole facility for the firsttwelve months of operation. The client regarded thecombined business risks as significant requiring proactivemanagement.

Two contract agreement documents involved in the procurement ofthe project are the Development Agreement between thedeveloper and the client, and the JBCC Principal BuildingAgreement between the developer and the contractor.

The Development Agreement between the client and the developerrequire the developer to:

• Construct and deliver the new student residence withintwelve calendar months from the date of handover of thesite by a predetermined date;

• Appoint design consultants formally approved of by theclient;

• Procure the construction works on the basis of the JBCCPrincipal Building Agreement;

• Obtain prior written approval from the client beforemaking payments to the contractor; and

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• Effect handover of the completed residence based on afinal completion certificate issued by the principal agentin terms of the JBCC Principal Building Agreement.

The agreement also required the client to enter into a fixed period,and fully repairing, agreement of lease with the developer oncompletion of the works. The design in which the outline design wasproduced by the client and supply of a new residence building is inaccordance with the client’s brief.

The following section analyses both the Development Agreementand the JBCC Principal Building Agreement to determine themanner in which the client had articulated its strategic objectives forthe purposes of management, control and performancemeasurement.

4.3 Reconciling the Development Agreement and theJBCC Principal Building Agreement

An inspection of the JBCC Agreement between the developer andthe contractor shows that it had been concluded withoutamendment, and that it agreed with the material terms of theDevelopment Agreement signed by the developer and the client inall respects. It would therefore seem logical that the objectives of theclient would be communicated to the contractor by the developer.After all, any construction risk that the developer would bear wouldsensibly be passed on to the contractor who is best placed tomanage that risk. Consequently, there ought to be a degree ofalignment between the two agreements.

4.4 Principle ObservationsOn the basis of this proposition, the contractual arrangements wereevaluated for their suitability in meeting the client’s strategicobjectives as shown in Table 2 and a comparison of the twoagreements in achieving this is presented in Table 3.

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Table 3: Analysis of the strategic objectives identified in the FieldStudy against the intrinsic provision made in the JBCCPrincipal Building Agreement for their management,control and performance measurement

STRATEGICOBJECTIVE

HOW STRATEGICOBJECTIVE IS

MET ANDCONTROLLED IN

JBCC

HOW PERFORMANCECRITERIA IN JBCCCONTRIBUTE TO

MEASUREMENT OFSTRATEGIC

OBJECTIVE ONCOMPLETION

COMMENTS

Socio-economic objectives

Sustainabledevelopment No provision No provision

Could have beenincorporated underPreliminaries.

Sustainableconstruction No provision No provision Ditto.

BlackEmpowerment No provision No provision Ditto.

Health andSafety Act Cl. 7 No provision

The obligation for Healthand Safety (H&S) in theJBCC is placed on thecontractor (Cl.7). TheRegulations (2003),however, shift the primaryonus of H &S ontoemployer.

Technological ObjectivesBuildingmaterials andfinishes

Employerspecification No provision Materials used must be fit-

for-purpose if not specified.

Building systems Employerspecification No provision Systems used must be fit-

for-purpose if not specified.

Equipment Employerspecification No provision

Equipment installed mustbe fit-for-purpose if notspecified.

Furniture andfittings N/A N/A Contract only for works

execution.

Whole life-cycle costs

Employerspecification No provision Employer obligation.

Operational objectives

Designfunctionality N/A N/A

Employer obligation.Contract only for worksexecution.

Aesthetics N/A N/AEmployer obligation.Contract only for worksexecution.

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The conclusion drawn from this analysis is that neither contractualarrangements supported the client’s strategic objectives. Morespecifically, the JBCC Principal Building Agreement was not only atvariance with the client’s established supply relationship with thedeveloper, but it made no meaningful contribution to themanagement and control of the client’s strategic objectives, nor didit provide any basis for the measurement of project outcomes interms of these matters.

A review of all key planning documents and organizational systemsrevealed how the JBCC Principal Building Agreement signed by thedeveloper and the contractor failed to meet the client strategicobjectives as there was:

• No evidence that a project organisation had beenpurposefully designed to meet strategic projectobjectives;

• No master development programme for the project interms of time;

STRATEGICOBJECTIVE

HOW STRATEGICOBJECTIVE IS

MET ANDCONTROLLED IN

JBCC

HOW PERFORMANCECRITERIA IN JBCCCONTRIBUTE TO

MEASUREMENT OFSTRATEGIC

OBJECTIVE ONCOMPLETION

COMMENTS

Business case objectives

Organisationalobjectives No provision No provision Would have to be

negotiated with contractor.

Stakeholderobjectives

Employerspecification No provision Employer obligation.

FunctionalObjectives

• Time

• Cost

• Quality

Cl.15.2

No provision

Cl.15.2

Subjective criteria

No provision

Subjective criteria

Work to be executed with‘diligence’, ‘regularity’,‘expedition’.

Employer obligation.

Workmanship to beexecuted with ‘due skill’ toa standard determined bythe principal agent.

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• No formal quality management plan for the project interms of the client’s technological objectives;

• No formal site safety management plan;

• No formal environmental management plan for thecontrol of construction activities in terms of ISO 14 001;

• No stakeholder management plan for the managementof project stakeholder objectives or relationships; and

• No formal procurement management plan in terms of theclient’s stated objectives for preferential procurement.

Following the review of the documentary evidence, interviews wereconducted on a semi-structured basis with the project manager andthe architect to explore these issues and to correlate and validatespecific findings. Both the developer and client were unwilling to beinterviewed, although the client provided the project documentation.These documents confirmed the initial observation that the client’sstrategic objectives in terms of the socio-economic objectives andcorporate policy were not explicitly communicated to the team, norstated in the project documents made available to them.

Both interviewees opined the supply relationship between the clientand the developer prior to conclusion of the developmentagreement as being collaborative in nature; a de facto joint venture,where one party provided land and the other finance. Bothexpressed surprised that the client subscribed to the JBCC PrincipalBuilding Agreement. Both considered the supply relationship and thecontractual arrangement to be inappropriate for the achievement ofthe strategic objectives of the client for the project because of thenumber of unresolved issues that remained the start of the project.Their opinion was that the JBCC Principal Building Agreement is onlyappropriate where there is certainty in design information and wherethe client is fully involved in the construction process. Both found thatthe division of roles and responsibilities between the client anddeveloper in terms of their rights and obligations in respect ofoutstanding matters to be completely inadequate as there is nodefinition, nor any parameters for their resolution.

Two steps taken by the client and the developer to manage theproject for the client’s stated strategic objectives were identified bythe architect and project manager, namely:

• putting a completion date in the contract; and

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• the appointment by the developer of a professionalplanner.

Other than these, they were unaware of any specific measures orsteps taken to manage project risk in terms of the contract and thatperformance criteria for the project were neither identified nordefined.

An analysis of all the project documents provided yielded only oneclear client strategic objective, namely, project completion by thedate recorded in the Development Agreement. This objective wasreinforced by significant penalties. This would indicate that thechoice of supply relationship adopted by the client appears to havebeen ill-considered for several reasons:

• The client procured the development by protractednegotiation with a ‘single source’ supplier. The relationshipwas highly collaborative from the start. Both the projectmanager and the architect described the supply relation-ship at inception as being akin to a ‘joint-venture’;

• The brief was incomplete at the date of contract. Both theDevelopment Agreement and JBCC Principal BuildingAgreement suggesting that it was going to require sig-nificant levels of joint working throughout the constructionperiod to ensure final product quality for project delivery;

• The nature of the agreement to proceed with the projectbefore contract was premised on a working relationship thatwas destined to last for more than two decades; and

• A strong demand by client stakeholders that had impactedon project scope.

It would appear that the essence of the contractual arrangementbetween the client and the developer was a ‘turn-key’ developmentcontract. The arrangement in which both the DevelopmentAgreement and JBCC Principal Building Agreement were applied tothe project, however, proved unduly complex for several reasons:

• The client had bound the developer to procure theconstruction works in terms of the JBCC Principal BuildingAgreement and then, through the terms of the Develop-ment Agreement, agreed to bind itself to accept projectcompletion based on a final completion certificate issued tothe developer by the principal agent (see Clause 26 of theJBCC Principal Building Agreement) in terms of acontractual arrangement between the developer and the

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contractor. The arrangement effectively precluded theclient from exercising any direct control over an eventintrinsic to its contractual rights under the DevelopmentAgreement; and

• Explicit in the development agreement was an under-standing the client would rely on all systems of managementand control intrinsic to the JBCC Principal BuildingAgreement in order to satisfy its objectives. It should benoted that the client’s interests in this regard are notrecorded in the construction agreement. The arrangementagain effectively precluded the client from exercising anydirect control over matters of immediate contractual rightunder the Development Agreement.

The weakness in the development agreement was that the clientchose to rely on mechanisms of control privy only to the developer interms of its relationship with the contractor at the second tier of thesupply chain. The client clearly stood outside this contractualrelationship and left itself without any means to exercise its rightsunder those terms. The client’s contractual position was thus greatlyweakened. It is postulated that this rather complex contractualarrangement between the client, developer and the constructioncontractor occurred because of a ‘thoughtless’ decision, possiblydriven by ‘over-familiarity’ or ‘trade-usage’ (Root & Hancock, 1996)to make use of the JBCC Principal Building Agreement which is soconveniently available to the construction industry.

It is clear that the reliance of the parties (and in particular the client)on the JBCC Principal Building Agreement was born out of a certainfamiliarity and confidence in its established use. Regretfully, theapproach of the parties prevented them from adopting a readymind to their own unique contractual requirements. Their attempt tocure their commercial arrangements in terms of this agreement,therefore, did much to weaken their contractual position with atendency to produce many oddities that could consequently lay thefoundation for serious conflict/dispute.

5. ConclusionsThis article has shown that the South African JBCC Principal BuildingAgreement deals only with the transaction to procure the built asset(construction work) within the parameters of the time required for itsdelivery, its cost, and the standard of quality to which it must be built.Its focus, therefore, is placed on construction process and the

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description of the product required for project delivery. The limitationof such a contracting method, in terms of the argument presentedthus far, would seem to indicate that the Agreement lacks utility forthe control of strategic objectives, or to establish the measuresnecessary to evaluate their success.

As a standard form document, JBCC Principal Building Agreementmakes no provision to deal with strategic objectives not met by itsphilosophy, structure, or parameters. All other procurement issuesrelated to the strategic and organisational objectives of theinvestment and business case that should be decided andmanaged under appropriate parameters fall outside its structure andcontrol. This means that construction clients who use the documentfor the benefit of its convenience are obliged to consider itsadequacy to manage strategic objectives within the wider sense ofthe investment and business case. The document clearly preventsthe client from accurately expressing his or her specific project wishesbut rather merely moulds the client’s intentions into a prescribeddocument.

At present in South Africa there is the added focus of developmentobjectives that have been identified as strategic for the wholecountry. The imperatives documented by government include thecreation of sustainable employment, skills development, affirmativeaction, the active promotion of small and micro- enterprises, and thedevelopment of public sector capacity to manage the deliveryprocess. Government policy requires that the construction industryrespond to these issues.

These imperatives reinforce the strategic value of process overproduct and should be reflected in the way the project is organisedoverall and in the methods of implementation — a matter that isclearly absent from the current version of the JBCC Principal BuildingAgreement. Up until the present time, procurement emphasis hasbeen placed on awarding contracts to companies with a requisitepercentage of black equity shareholding. Recent market signalsindicate, however, that added weight is being placed on meetingthe country’s imperatives by operational practices within theconstruction process. It has thus become more important to structurethe contractual framework accordingly and to determineperformance measures aligned with a uniquely developmentalapproach which, in turn, is responsive to specificities, and theresource base of the location in which it is to occur.

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6. Future researchThe following suggestions are offered for further research: • Methodologies need to be developed to assist in the

examination of the appropriateness of the JBCC Agree-ment to various client investment / business case scenarios;

• Alternative standard forms of contract should be developedfor the different procurement systems used in South Africa(e.g., construction management, managementcontracting, design and build, etc.);

• Mechanisms need to be developed for inclusion in theAgreement to facilitate the management and control ofsecond-order objectives related to sustainable construction;

• Mechanisms need to be developed to facilitate holding theprincipal agent and other agents contractually responsiblefor the performance of their duties in respect of the exe-cution of the works;

• An alternative mechanism(s) needs to be created toreimburse the construction client for his or her loss where theprovision of a penalty on the contractor is inappropriate inrespect of non-completion;

• Alternative mechanisms need to be considered for inclusionin the Agreement in order to control transactional behaviour(e.g. joint working, financial incentives, etc.);

• Objective criteria need to be developed for the proactivemanagement of time and quality;

• Mechanisms need to be developed to include costmanagement as part of the contractor’s responsibility;

• Mechanisms need to be developed to manage risk withinthe Agreement that is intrinsic to the outcome of thestrategic objectives of the investment/business case;

• Objective criteria need to be developed to ensure thelegitimacy of the nature of a ‘disagreement’ before it iselevated to the status of a ‘dispute’; and

• Procedures need to be developed to ensure that adisagreement is properly documented before it is referredup to the next level of management in the organisations ofboth contracting parties and/or third party determination.

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AcknowledgementsThe authors wish to acknowledge, with thanks, the input of ProfessorR.H. Christie QC, Department of Commercial Law, University of CapeTown; Mr T. Boxall, legal practitioner and part-time lecturer, Universityof Cape Town; and Professor Emeritus G.K. le Roux. The authors arealso indebted to the anonymous referees for their constructivecomments on an earlier version of the article.

Gert Basson

Project management processes simplifiedPeer reviewed

AbstractProject management involves the application of a number of knowledgeareas and processes to projects, some being applied more and some lessrigorously, depending on the characteristics of the project considered. Thisarticle motivates the grouping of these processes under three headings, i.e.core, facilitating and continuous processes. It also arranges them in a flowdiagram format to summarise the entire field of project management on onepage. Keywords: project management, project processes, core processes, projectmanagement model, project flow diagram

AbstrakProjekbestuur behels die toepassing van ’n hele aantal kennisvelde enprosesse op projekte. Sommiges word strenger as ander toegepas,afhangende van die eienskappe van die spesifieke projek onder beskouing.Die artikel motiveer die groepering van hierdie prosesse onder drie hoofde,naamlik kern-, ondersteunende- en deurlopende prosesse. Dit rangskik hulleook in ’n vloeidiagramformaat wat die hele veld van projekbestuur op eenbladsy opsom.Sleutelwoorde: projekbestuur, projekprosesse, kernprosesse, projekbestuur-model, projek vloeidiagram

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Mr Gert AJ Basson, Programme Leader Project Management, Department ofConstruction Economics, University of Pretoria, South Africa. Tel: +27 82 9001500. Email: <[email protected]>

Kommentaar • Commentary

1. Introduction

Generic project management knowledge, skills and processesapply to all projects, albeit some to a larger and some to alesser degree, depending on the characteristics of the

specific project. This means that the processes for each project are,to some extent, unique to suit its specific scope (the work to beexecuted or objectives to be achieved). It is thus not the processeswhich change or become less important, it is only that some aremore or less accentuated, as dictated by the nature of the specificproject.

It is against this background that the main project managementprocesses are grouped under three headings in this article. The basicprinciples of this arrangement are discussed by briefly summarisingthe constituent processes entailed in each main process under eachheading and confirming its relevance and the reasons for itsgrouping.

The result is a very simple (one page) presentation which might beuseful:

• As an introduction to or orientation towards the field ofproject management;

• To put the project management processes in perspective;

• To ensure that all project management processes areaddressed; and

• A practice guide in poster format

2. Related references to the PMBOK of the PMIThe above principles are confirmed by the various editions of theProject Management Institute’s (PMI of USA) publications: A Guide tothe Project Management Body of Knowledge (PMBOK) (PMI, 1996;2000; 2004):

The processes identified and the interactions illustrated … meetthe test of general acceptance — they apply to most projectsmost of the time. However, not all of the processes will be neededon all projects, and not all of the interactions will apply to allprojects (PMI, 1996: 34; PMI, 2000: 37).

orThis does not mean that the knowledge, skills and processesdescribed should always be applied uniformly on all projects. Theproject manager, in collaboration with the project team, is

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Basson • Project management processes simplified

always responsible for determining what processes areappropriate and the appropriate degree of rigor for eachprocess, for any given project (PMI, 2004: 37).

Both the 1996 and 2000 editions of the PMBOK distinguish between‘core’ and ‘facilitating’ processes as follows:

Core processes — Some planning processes have cleardependencies that require them to be performed in essentiallythe same order on most projects. For example, activities must bedefined before they can be scheduled or costed (PMI, 1996: 30;PMI, 2000: 33).

andFacilitating processes — Interactions among the other planningprocesses are more dependent on the nature of the project (PMI,1996: 32; PMI, 2000: 34).

Both editions illustrate these in figures depicting relationships betweenprocesses. Although the above refer to the planning process grouponly, it is stated that the same principle applies equally to the otherphases or main process groups of a project. Illustrative figures for theother phases are, similarly, provided.

The 2004 edition of the PMBOK conveys the same principle in terms ofinteractions by stating: “Other interactions among the processeswithin the Planning Process Group are dependent on the nature ofthe project” (PMI, 2004). It illustrates each of the main process groupsby way of charts depicting interactions between processes.

3. Proposed grouping of main processesConsidering the above and in an attempt to convey the totalconcept and field of project management in a simplified way as anintroduction or to novices, three main process groups are disting-uished.

The three types of main process groups suggested are ‘core’,‘facilitating’ and ‘continuous’ processes. They are defined as follows:

3.1 Core ProcessesCore processes are pre-requisites to or essential for the planning andexecution of any project. They are, to a large extent, interrelated andmostly carried out sequentially to cater for interdependencies (withobvious iterations between them, especially during planning).

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3.2 Facilitating processesFacilitating processes are more supportive and dependent on thenature of the project. They are not always all required (or required tothe same extent) on all projects. They can, in many cases, beperformed in parallel to the core processes. In some cases, however,some of them can only be assessed or conducted after the coreprocess are completed or sufficiently advanced to avail informationrequired for or by them. They may thus lead to iterative work innecessitating partial or complete revision of the completed (up tothen planning) processes.

3.3 Continuous processesThe ‘new’ main group defined is called continuous processes. Theyare those (prominently) present from inception to final close out of aproject. They are organisational or managerial by nature and impactdirectly and throughout the project on all other processes. They also,to a large extent, embrace the main functions of the projectmanager himself.

3.4 Conclusion: Proposed Grouping of Main ProcessesThe above main groups and the constituent processes includedunder each are visually illustrated in flow diagram format as Figure 1:Project Management Processes Simplified. The diagram alsosummarises the entire field of project management as defined by theProject Management Institute (nine knowledge areas - indicated inbold font) in a very simple format on one page.

The names of the knowledge areas were (deliberately) chosen asthe descriptions in the text boxes to (also) represent the respectiveconstituent processes (although abbreviated for simplicity). Thereasons for this were ease of reference to the well-known knowledgeareas, to readily introduce any novice to the total field of projectmanagement and to simplify the one page poster format.

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Figure 1: Project management processes simplifiedSource: Basson, 1996: authors own diagram

4. Constituent processesThe respective sub-processes included under the descriptions of eachof the ‘constituent processes’ below are summarised to indicate thebasic contents of the planning aspects of each ‘constituent process’,rather than repeating all the processes and interactions from anyedition of the PMBOK or related literature.

The purpose of including any descriptions of sub-processes is to, also,serve as background to motivate the placing of a specific ‘constituentprocess’ under a specific heading or main type of process only andnot to convey detailed information on such a ‘constituent process’itself.

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4.1 Core ProcessesThese are the essential processes for the planning and execution of allprojects as defined in sections 2.0 and 3.1, above, and consist of basicsub-processes and elements as summarised below:

4.1.1 Scope ManagementThis entails project scope management during the initiation andplanning stages, i.e.

• Statement of Work (SOW): What

• Milestone schedule: by When

• Specifications: how Well

• Work Breakdown Structure (WBS): Tasks and Logic

• Resources: by Whom, with What

• Responsibilities (LRCs, RAMs): Roles / ParticipationScope Management must be a core process as it defines the projectin terms of its objectives and requirements, without which no projectcan exist. It also includes the basic planning processes as basis formost other processes.

4.1.2 Time ManagementIt includes the time planning processes and may entail scheduling toany technique (or combination of techniques) and various levels ofdetail, as summarised below:

• Activities (Tasks): from WBS

• Duration of each activity: with Team

• Logic diagram: Interdependencies

• Time Plan(s): Bar Charts: Gantt/LinearLine of BalanceNetworks

PERTCPMPrecedenceCritical Chain

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Due to its essence as a main project constraint, time planning,however rudimentary or elaborate of nature, must be part of thecore processes. It can be performed in parallel with costmanagement

4.1.3 Cost ManagementCost Management refers to the project cost management processduring the initiating and planning stages, i.e. estimating to variousrepetitive degrees of accuracy:

• Activities (Tasks): From WBS

• Resources and resource rates: Labor, materials, etc

• Cost of each activity: Estimates

• Role (add) up: BudgetCost Management should, by virtue of its essentiality on any project,and, however basically estimated or determined in detail, be a coreprocess.

4.1.4 Cash flow (Baseline)This text box combines the time and cost results in the form of a time-related budget or cash flow. In graph format it will, typically, be thebaseline e.g. Earned Value Management and is a core productfollowing from the preceding core processes.

4.1.5 Project Plan(s)The project plan summarises all the above planning processes forfinal evaluation, approval and go-ahead. It also provides the basisfor execution. The main project plan may include various sub-plans,depending on the method of execution, e.g. sub-plans for tasksdistributed to others or packages to be procured. It is a coredocument based on the core processes up to this stage andessential for those to follow.

4.1.6 ExecutionThe next core process is execution, i.e. converting planning intoreality. Should no portions require procurement, i.e. the entity is selfsufficient enough to handle all aspects on its own, execution followsdirectly after the approval of the project plan.

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4.1.7 Close out The close out actions concludes the execution process. It includesthe final acceptance of deliverables. It forms part of overall projectclose out under ‘integration management’.

4.1.8 Conclusion: Core processesThe above (‘core’) processes are, clearly, all essential to the planningand completion of any project. It may even be stated that withoutthese there can, in fact, not be a project or a final outcome.

4.2 Facilitating ProcessesThese are the facilitating or supporting processes as defined insections 2.0 and 3.2, above. Their sub-elements are, apart fromproject specific aspects, already in place for routine or repetitivetypes of projects. ‘Routine’ projects are those types of projectshandled by the entity on a regular basis as part of its normal business.They are thus only freshly developed for project specific (unique)tasks on routine projects and, largely, re-developed for new types ofprojects or ventures.

These processes are listed below, together with their main sub-elements:

4.2.1 Quality ManagementQuality planning for new types of projects can be summarized asgenerating the following documents:

• Quality policy

• Prescribed standards / processes

• Benchmarking and Tests

• Quality plan: SystemsProcessesProceduresChecklists

The above descriptions for facilitating processes apply to qualitymanagement for which policies, systems, procedures andspecifications exist on routine or repetitive projects, but will have tobe largely re-developed for new endeavours.

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The impact on time durations and cost rates of adhering to (‘normal’)quality standards are known and automatically discounted in thedurations and rates of repetitive tasks. Most of these are determinedor factored from historical data for projects of the same kind. For newtypes of projects, the durations and rates have to be freshlydetermined, in many cases from first principles and takingcognisance of the quality processes entailed. The horizontal arrowindicates that new information on quality is fed into the system prior totime and cost planning being effected (or finalised).

The control functions for quality are executed from inception to closeout on all processes and for all projects (routine or new) as depictedby the vertical arrow in Figure 1.

4.2.2 Risk ManagementThe following aspects of risk management are executed during theplanning stage of new projects:

• Planning

• Identification: Sources, Risks

• Quantification / Analyses: Impact/Ranking/Amount & Probability

• Evaluation

• Response: TransferRetain (reserve)

Largely, the same principles and arguments presented in sections 2.0and 3.2 for ‘Facilitating processes’ and for ‘Quality Management’ insection 4.2.1, above, apply to ‘Risk Management’ to motivate it as asupplementary (‘facilitating’) process.

For most routine or repetitive projects handled by an organisationvery few new risks are present. ‘Routine’ risks are, as for ‘routine’quality, already taken care of in ‘routine’ time durations and costrates. New ventures, on the other hand, may involve many new riskswith completely different impacts on durations and rates and willhave to be determined and assessed from scratch.

Some risks can only be determined once planning is advanced, butare, again, project specific. “For example, on some projects, theremay be little or no identifiable risk until after most of the planning hasbeen done and the team recognises that the cost and scheduletargets are extremely aggressive and thus involve considerable risk”

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(PMI, 1999: 32; PMI, 2000: 34). The latter is confirmed in the PMBOK of2004 (although slightly differently phrased) (PMI, 2004: 46).

The latter situation will lead to iterative planning processes.

4.2.3 Procurement ManagementProcurement, where required, entails the following for eachpackage to be procured:

• Scope (and WBS): For each package

• Source investigations

• Procurement documents

• Contract type

• Tenders (Bids) : RFI, RFP, RFB, RFQ

• Evaluation, Selection, Appointment, Agreement (= Contract)

• Contract management

• Contract close outProcurement is a typical ‘facilitating’ process as defined in sections2.0 and 3.2, above. Many organisations are able to execute projectsentirely within their own organisations, i.e. no need for procurement(e.g. the manufacturing industry or Research and Developmentprojects), while others have to source certain or most tasks out toexternal parties (e.g. the construction industry). Only in the latter casewill procurement of such external resources be required.Procurement is effected as defined in and after the approval of theproject plan (horizontal arrow) and managed during execution(vertical arrow).

4.2.4 Conclusion: Facilitating ProcessesThe above processes all fit the definitions of ‘facilitating’ processes insections 2.0 and 3.2. They are considered at the opportune stage inthe planning process and applied to the extent required by thespecific project or project type. They impact on the other processesand are controlled throughout the remainder of the project asdepicted by the horizontal and vertical arrows in figure 1.

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4.3 Continuous Processes‘Continuous’ Processes are defined in section 3.3 and are thosepresent from inception to final completion of the project. They alsoimpact on all other processes.

The processes grouped under this heading are indicated and brieflydiscussed below in terms of the basic contents and relevance ofeach:

4.3.1 Human Resource ManagementThis process entails human resource management and humanrelations in a broad context and may include, inter alia, the followingsub-items and functions:

• Human resource requirements (from WBS);

• Recruitment / Sourcing;

• Compensation schemes / agreements;

• Team formation (including Stakeholders);

• Project organisational structure (or OBS);

• Leadership;

• Team building;

• Negotiation;

• Conflict management;

• Performance evaluation (Post mortems); and

• Dissolving the team (if required)The above commences at the first interaction when the projectmanager meets with his superior or client upon his appointment andlasts until final appreciation is expressed at close out.

It is one of the most important functions of the project manager and(most probably) the single most determining aspect leading toproject success or failure.

4.3.2 Communications ManagementThis includes all aspects of project communications management,i.e.:

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• Communications planning : Who needs what, when andhow to supply it;

• Information distribution;

• Performance reporting; and

• Closure (and archiving)Communications management, similar to ‘Human’, commenceswhen the first information is transferred at inception and lasts until all isarchived.

It impacts on all other processes and needs to be intimatelymanaged and taken cognisance of by the project manager.

4.3.3 Integration ManagementIntegration management entails the items listed below to integratethe project as a whole:

• Develop project plan: Actions, policies, procedures

• Direct and manage project execution (and interfaces)

• Integrated change control (and project plan updates)

• Total project close out Integration, obviously, is required throughout the entire duration ofthe project to ensure centralised co-ordination.

It also requires, to a large extent, the personal attention of the projectmanager to enable him to be fully informed and ensure that thereare no loose ends between any participating parties or individualprocesses, respectively.

4.3.4 ControlControl, in general, entails:

• Manage adherence to systems, processes andprocedures;

• Measure performance;

• Evaluate outputs;

• Apply corrective actions (if and where required); and

• Update systems, processes and procedures

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Control is applicable to all processes individually, as well as theproject as a whole (in an integrated manner) as part of IntegrationManagement. It is, however intensive or rudimentary applied,mandatory from inception to final close out to ensure conformance.

4.3.5 Conclusion: Continuous ProcessesThe above processes are all essential throughout the entire ‘lifespan’of any project. They commence at inception and remain active andof cardinal importance until final close out.

It is, further, suggested that all other processes or ‘tasks’ can (to alarge extent, if centrally managed and controlled) be delegated ona project. The latter processes, however, MUST be retained andexecuted by the Project Manager (or, at least, be intimatelycontrolled by him on large projects).

5. ConclusionThe above recognises all processes and ensures that all are equallyconsidered on each project so as to take cognisance of each andestablish the prominence of their individual roles on the project orproject type under consideration.

The proposed grouping of main processes, however, also simplifies ordemystifies the total concept of Project Management. It includes allthe principles and constituent elements of the entire field of projectmanagement, yet presents it in a format enabling every person, evenwith only a basic knowledge of project management, to understand,use and apply it on any project.

‘It is only once one comprehends the full complexity that you graspthe simplicity’

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ReferencesBasson, G.A.J. 2005. Project Management Processes Simplified. Paperat the 49th Annual Meeting of AACE International, New Orleans, USA,26 to 28 June 2005

Project Management Institute (PMI). 1996. A Guide to the ProjectManagement Body of Knowledge. (PMBOK Guides). USA: PMI.



AbbreviationsCPM : Critical Path Method

LRC : Linear Responsibility Chart

OBS : Organisational Breakdown Structure

PERT : Programme Evaluation and Review Technique

RAM : Responsibility Assignment Matrix

RFB : Request for Bid

RFI : Request for Information

RFP : Request for Proposal

SOW : Statement of Work

WBS : Work Breakdown Structure

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